Arthur Hayes: The Federal Reserve announced the cessation of the BTFP policy, and banks are facing a critical decision

BitMEX co-founder Arthur Hayes stated on social media that the Federal Reserve has announced the discontinuation of its Bank Term Funding Facility (BTFP) policy. Hayes interpreted this move, stating that theoretically any bank holding loss-making US Treasury bonds (UST) or mortgage-backed securities (MBS) facing maturity losses should convert them into cash by March 11th to buy more time. However, if the Fed's reduction or termination of quantitative tightening policies leads to a rise in bond prices, then banks' chief financial officers will be locked into unfavorable financing. The chart posted by Hayes shows a sharp upward trend in reserve balances, implying that the market is at a crucial decision point, especially for those banks on the brink of bankruptcy. It is reported that the Federal Reserve will end its Bank Term Funding Facility (BTFP) on March 11th, and currently loans under BTFP will continue until the program ends.