Bitcoin has not had the best of weeks so far but its 8% slide is just a blip compared to what the US Federal Reserve has been doing recently. The central bank has ramped up its bailout or ‘repo’ scheme by injecting more money into the financial system.
FED Repo Payments Dwarfs Bitcoin
Last week the US Federal Reserve injected more than the entire cryptocurrency market capitalization back into the financial system. These repurchase agreements (repo) are a form of short-term borrowing for dealers in government securities. The borrowers are often banks that use the cash to finance positions in the market.
According to Bloomberg, the FED injected $278 billion into the repo market over four days last week, so that banks could meet their liquidity needs. The current bitcoin and crypto market cap is just over $200 billion so let that sink in for a while …
This week those repo payments have been ramped up again from $75 billion per day to $120 billion according to CNBC. Lebanese-American essayist and scholar, Nassim Nicholas Taleb, aptly pointed out the futility of the current banking system.
The most potent case for cryptocurrencies: banks are never there when you need them. And they are trying to bully the public so they avoid accountability and profit disbursements. Bankers are legal crooks.
The most potent case for cryptocurrencies: banks are never there when you need them. And they are trying to bully the public so they avoid accountability and profit disbursements.
Bankers are legal crooks.#bottomup #bitcoin#Lebanon https://t.co/Fp3QPFFkJQ
— Nassim Nicholas Taleb (@nntaleb) October 24, 2019
Naturally, Fed officials and bankers were quick to dismiss the liquidity breakdown and defend their actions though US president Trump had other ideas.