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New York Community Bank plunges by 30%, BitMEX founder: Bitcoin will replicate last year's rally

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New York Community Bank plunges by 30%, BitMEX founder: Bitcoin will replicate last year

New York Community Bank (NYCB) faced a sharp sell-off due to underwhelming financial results and the announcement of a dividend cut. NYCB has some minor connections to the cryptocurrency field, as its subsidiary once took over Signature Bank and was also one of the deposit banks for Circle. This inevitably brings to mind the banking crisis that erupted in the United States in March of last year.

New York Community Bancorp Hits All-Time Single-Day Decline

New York Community Bancorp, Inc., with the ticker NYCB, announced a net loss of $252 million in its fourth-quarter financial report on the 31st, and declared a significant cut to its dividends.

NYCB reduced its quarterly dividend from $0.17 per share to $0.05 per share, a 71% decrease from the previous quarter, meaning a two-thirds reduction in cash income for NYCB holders.

Following the opening of the evening stock market, NYCB immediately plummeted by 46%, marking a 37% daily decline and setting a new record for NYCB's largest single-day drop.

NYCB Stock Price

Banking Stocks Affected Following NYCB Impact

According to NYCB's financial report, the bank incurred a loss of $360 million in the fourth quarter of last year, resulting in a loss of $0.36 per share.

This is significantly lower than the analysts' expected earnings per share of $0.27. NYCB CEO Thomas Cangemi stated:

The dividend cut is to ensure that we have "sufficient capital" to continue business operations and lay the foundation for our future growth.

NYCB's crash also affected other banking stocks, causing other mid-sized banks like Valley National Bancorp (VLY), BankUnited (BKU), and Western Alliance (WAL) to drop as well.

Acquiring Signature Bank, Formerly One of Circle's Depository Banks

Reportedly, New York Community Bancorp owns several banks under its umbrella, including Community Bank, Ohio Savings Bank, and Flagstar Bank, with a total of 225 branches.

Flagstar Bank is also one of the depository banks for the stablecoin issuer Circle.

Furthermore, during the banking crisis in the first quarter of last year, New York Community Bancorp took on some of Signature Bank's assets in a rescue role, only to find itself in this predicament.

Abandoning digital banking-related deposits, Flagstar Bank takes over Signature

BitMEX Co-Founder: Bitcoin to Rise

Arthur Hayes also noted the sharp decline of New York Community Bancorp, suggesting that the Federal Reserve and the Treasury will soon resume printing money for reasons including:

  • The "unexpected loss" this time by NYCB is due to loan loss reserves increasing tenfold, indicating the bank has not yet fully recovered.

  • The decline in 2-year and 10-year Treasury bond yields, suggesting some form of stimulus is expected.

  • The previous market rescue program BTFP by the Federal Reserve may no longer be effective.

He predicts a slight drop in Bitcoin prices, and if New York Community Bancorp and related bank stocks fall again over the weekend, he believes government assistance will come sooner, triggering a new upward trend for Bitcoin, similar to Bitcoin's performance in March last year.

Arthur Hayes on BTFP, Banking System-Induced Deflation, and the Fed's Imminent Rate Cut