Uncertainty and lack of liquidity are two of the factors behind one of the last decisions of the United States Federal Reserve, the most powerful central bank in the world: injecting money to calm the markets.
But not any amount. The Fed put US $ 203 billion into the financial system this week and said it has another $ 75 billion prepared in case they are needed.
This intervention is the first of its kind since 2008, when the Great Financial Crisis forced central banks around the world to intervene in the markets trying to stop the debacle that came later.
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The objective of the US Federal Reserve was to stabilize what is generally a quiet part of the market, but which is essential for the proper functioning of the financial system: the buyback market.
The operations of "repo" or repurchase are one of the types of transaction most used by banks and other large companies to obtain liquidity in very short terms.
Large institutions or companies lend money to each other in the repurchase market.
We are talking about loans of days, weeks or months. Not 20 or 30 years as usual mortgage loans.
What happened is that, on the one hand, the shortage of cash, and on the other, the uncertainty about the real state of the economy, caused the reference rate in these contracts on Wall Street last Monday to rebound strongly .
They went from a level around 2.21% to 10%.
"The repurchase market (repo), where banks and stock traders can obtain secured loans, is a critical barometer of the health of financial markets," explains Jerome Schneider, manager of Pimco, one of the world's largest companies of investment in public debt.
What is the repo market?
Banks, hedge funds and other large companies regularly come to this market to borrow money with which to ensure that their accounting books are in order.
They do this regardless of their daily activities.
"The repo market is essential for the efficient operation of almost all financial markets," says the International Capital Market Association, they are based in Switzerland.
Now we add this to the world economic system that "is a reliable, more stable and less volatile system than cryptocurrencies in this case for our analysis Bitcoin, which has a higher volatility index"
The main reason behind the collapse would be in future contracts offered by the Chicago Mercantile Exchange (CME).
50% of CME's options have an expiration date on Friday 27/09, which would boost the fall in the price of the currency as explained by Trustnodes analysts: "There are few things more predictable in Bitcoin than the price will fall before the last Friday of the month, when futures expire, and that price will increase after that. "
These maturities would be such a determining event for the price of bitcoin, as they would boost market manipulation. When the end date of the options approaches, some speculators are selling BTC in the spot market. These sales increase the liquidity of the currency, affecting its price, as explained by the American Finance Association:
"Without physical delivery, corner-based or squeeze strategies are not feasible. However, uninformed investors still obtain positive expected benefits, by establishing a futures position and then negotiating in the spot market to manipulate the price used to calculate the settlement. in cash at the time of delivery, "he explains.
Therefore, and despite the sharp fall in the price of bitcoin, if the analyzes are true, there will be a rebound in the price of bitcoin.
Others claim that it hit against bitcoin, the poor premiere of Bakkt, the new platform promoted by ICE (Intercontinental Exchange, owner of the New York Stock Exchange) for the negotiation of bitcoin futures with physical delivery.
The collapse of the BTC has coincided with a sudden collapse in the hash rate of its Blockchain. The hash rate of a cryptocurrency represents the computing power of your network for performing mathematical operations that will allow you to fix transactions on the Blockchain.
In simple terms, the hash rate tells us how many miners are in the Blockchain, and how much power the cryptocurrency has to carry out transactions. This rate has experienced a period of growth throughout the year, which has led it to reach constant historical highs
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