One Reason and One Warning for Bitcoin and Ethereum’s Recent Pumps: Arthur Hayes
The cryptocurrency market has rallied sharply over the past 24 hours, targeting the coveted $1 trillion in total capitalization. Leading the way is Ethereum, which is up over 11%, while Bitcoin also pumped a significant 5%.
Commenting on the matter, the former CEO and co-founder of BitMEX, Arthur Hayes, gave his rationale for the latest increase.
Bitcoin and Ethereum pumping
Yesterday, the cryptocurrency market finally made a move, and it was on the upside. Bitcoin rose by around 5% in the last 24 hours and is currently trading at around $20,300. It is now important for the bulls to defend this critical level which contains several technical as well as fundamental opponents.
Ethereum also rose and is currently found above $1500. Interestingly, this is the highest price the cryptocurrency has reached since The Merge.
The rest of the market also followed suit, pushing the total capitalization towards the coveted $1 trillion mark.
Why the pump?
The recent pump sent the derivatives market into a frenzy as over $800 million worth of predominantly short positions were liquidated.
Commenting on the matter was Arthur Hayes – CEO and co-founder of the popular derivatives exchange BiteMEX. According to him, the US government has a lot to do with the recent pump. He explained that the US Treasury is “considering supplying the market with more short-term T-bills to alleviate shortages.”
The veteran explained that MMFs “like short-term T-bills, but it’s not enough, so they park their money in the Fed’s reverse repo facility. It gives a corresponding return. Credit risk is also a factor…”
Hayes explained that there is $2.2 trillion sitting in the Fed’s Reverse Repurchase Facility (RRP), and if that number goes down, the market will continue to rise. But there is also a catch.
These buybacks and re-issues of new current T-bills have not actually happened yet. If this is just a test balloon and it pops, be sure to put on the adult diaper for reversal.
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