The latest steps of the Federal Reserve System (FRS) in the foreign exchange market may cause a new wave of bitcoin price growth. This opinion was expressed by a number of well-known representatives of the cryptocurrency industry.
On Tuesday, September 17, a sharp increase in rates on the repo market (securities purchase / sale transactions with an obligation to resell them) forced the Fed to resort to providing liquidity for this instrument for the first time in ten years. So, if on Monday repo rates rose from 2.29% to 4.75%, then on Tuesday they exceeded 10%.
Repo rate hikes usually happen at the end of the quarter, sometimes at the end of the month. The mid-month surge was due to a series of events that led to an imbalance between liquidity reserves in the banking system and the volume of securities on the dealers' balance sheet, including tax payments by companies, settlements on treasury auctions held last week. A recent drone attack on oil facilities in Saudi Arabia could also have an impact.
In total, the Fed issued $ 53.15 billion out of a possible $ 75 billion by repo to cover the US dollar deficit in the foreign exchange market. And although this event did not seriously affect the dynamics of the stock market and the dollar, representatives of the cryptocurrency industry believe that it can have favorable consequences for the price of bitcoin.
Arthur Hayes, head of the BitMEX cryptocurrency derivatives exchange, believes that saturating the money supply economy will lead to a further loss of faith in fiat currencies, and advises to prepare for the fact that Bitcoin will again test the level of $ 20,000.
QE4eva is coming. Once the Fed gets religion again, get ready for #bitcoin $ 20,000. https://t.co/gCBgaernYv
– Arthur Hayes (@CryptoHayes) September 18, 2019
The fact that investors should probably start to open long positions on Bitcoin was also written by the CEO of the leading European Bitstamp exchange, Neich Kodrich.
FED just injected $ 53 billion into the banking system through transactions known as repurchase agreements (repo) and announced up to $ 75 billion more on Wednesday morning.
Long #bitcoin !
– Nejc Kodrič (@nejc_kodric) September 18, 2019
It is noteworthy that today the Fed will also announce the results of its September meeting. Analysts' consensus forecast last week suggests that the regulator will lower the discount rate by 0.25%.
Recall that earlier Morgan Creek Digital co-founder Anthony Pompliano said that the infrastructure of Bitcoin and other cryptocurrencies continues to develop steadily, which indicates the growing popularity of cryptocurrency markets. According to him, the time will come when Bitcoin will inevitably be present in the portfolio of each institutional investor.
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