Federal Reserve’s Record $235 Billion Repo Intervention Validates Bitcoin

While Bitcoin is an asset independent of central banks, of banks, and of Wall Street, the cryptocurrency’s strength and underlying value proposition have become increasingly dependent on events in the traditional financial world as this fledgling industry has grown.Related Reading: Bitcoin Fixes This: Top Bank Chief Says Monetary Policy is FailingOne such pro-Bitcoin event, or trend rather, is the Federal Reserve’s decision to pump billions of dollars worth of liquidity into the repo market. Some say that this validates the idea of decentralized cryptocurrency entirely.Federal Reserve Pumps Billions Into Repo MarketAccording to Daniel Lacalle, an economist based in London, the Federal Reserve just set a record. The record? $235 billion worth of repo market interventions on December 25th, nearly double the previous record of $133 billion set in July 2008, in the midst of the Great Recession of 2008.New record: USD 235 billion in repo interventionThe highest value in 2008 was USD 133 billion in July, 18th 2008. Two months before Lehman went bust, but repo market as of today is around 40% SMALLER than in 2008.(thanks Dan Miraglia, QAM) pic.twitter.com/x3Fc1W5kJI— Daniel Lacalle (@dlacalle_IA) December 27, 2019For those unaware, the repo market, also called the overnight loan market, is the “place” in which the Federal Reserve issues extremely short-term though large loans (literally overnight) to financial institutions to keep said institutions operational.By the end of the year, the Federal Reserve is expected to have printed an extra $425 billion to keep reserve liquidity intact. This will drive up the central bank’s balance sheet to a record of $4.5 trillion, which comes in spite of the fact that stock markets are at all-time highs and economists around the world are cheering for equities to continue to rip higher.Related Reading: Bitcoin Fixes This: Fake Gold Bars Could Turn Investors Toward Digital CounterpartWhy This Is Good For BitcoinAs to why these repo injections are bullish for Bitcoin, Caitlin Long, a former Wall Street executive turned political proponent for blockchain and cryptocurrency in the State of Wyoming, released a Forbes article about this earlier this year.

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