Although Bitcoin is an emerging asset that is independent of the government and Wall Street, with the more significant "financial attributes" of Bitcoin and the rapid development of the industry over the past few years, those traditional financial markets The proven regularity logic for ten or even hundreds of years is being moved into the cryptocurrency market by more and more people.
For example, some news that will have an impact on traditional large-scale assets have been increasingly used to "match" directly with the market fluctuations of crypto assets such as Bitcoin, and this is precisely the increase in Bitcoin in the past two years. More and more are called the main reasons for "hedging assets". Especially in the middle of this year, Bitcoin's very sensitive positive feedback on the risk aversion caused by geopolitical issues around the world has strengthened this "new consensus" that the market has not yet formed.
In recent times, a blockbuster news has once again attracted great attention from the global financial markets. If you are an investor focused on the cryptocurrency market, you may not notice this news too much. However, some market analysts have pointed out that this news is likely to become an important promoter of Bitcoin's "take off again."
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- The Bank of International Settlements economists propose a new method for financial market monitoring based on DLT
Does that make you interested in what's next?
"That blockbuster news"-the Fed will frantically "water-inject" $ 500 billion over the next 30 days
In the early morning of Beijing time (December 13), the New York Federal Reserve issued the latest "repurchase operation statement". The statement shows that the New York Fed will continue to provide regular two-week repurchase operations twice a week, four of which cross the year. In addition, another long-term multi-year repurchase operation will be provided, which alone will inject at least US $ 50 billion into the market, but the amount of this repurchase is far more than 50 billion.
In order to prevent a sharp tightening of liquidity at the end of the year, the New York Fed will continue to conduct repurchase operations on a daily basis. For security reasons, the New York Fed will expand the size of the repurchase:
The repurchase operation plan for the second half of December totaled $ 365 billion;
On December 16, a 32-day period of up to $ 50 billion will be carried out;
Other operating periods range from 13 to 15 days, with a maximum size of 35 billion U.S. dollars, similar to previous operating periods;
A one-day forward settlement operation of USD 75 billion will be carried out on December 30, settled on December 31, and expire on January 2;
The scale of overnight operations on December 31 and January 2 was increased to at least 150 billion U.S. dollars, in order to smoothly pass the period of "turnover" in annual liquidity.
According to calculations, if the purchase of 60 billion US dollars of Treasury bills is added, the Fed will "inject water" for a total of nearly 500 billion US dollars in the next 30 days. This also means that by January 14, the Fed's balance sheet will accumulate an increase of $ 365 billion in "temporary" repurchases, plus expanded overnight repurchases, and monthly Treasury bill purchases of $ 60 billion, to 1 In the middle of the month, the Fed's balance sheet will expand from the current $ 4.066 trillion to a record high of $ 4.5 trillion!
The last time the Fed conducted such an astonishing market intervention repo, it must be traced back to the period of the financial crisis of 2007-2008, which may also mean that the Fed has officially started to "prevent" a new round of economic recession.
Why is this good for Bitcoin?
Because the legal currency system in the world is controlled by the central banks of various countries, that is to say, the right of the central bank to "print money" dooms the existing financial system to be very fragile. In special periods, the central bank can choose to issue a large number of additional currencies to ensure sufficient liquidity in the capital market, but this behavior will inevitably lead to the simultaneous occurrence of inflation. Although we have always believed that reasonable inflation growth is an essential factor for the stable growth of an economy, when the growth rate of inflation exceeds a "reasonable range", the country's economy can easily fall into a collapsed state. One of the simplest examples, the current domestic environment in Venezuela, is an example of the "bloody" caused by extremely deteriorating "speed inflation".
However, for Bitcoin, since Bitcoin was limited to a maximum number of 21 million at the beginning of its birth, Bitcoin is an inherently deflationary asset. And as Bitcoin ’s “consensus” around the world has gradually formed, this almost borderless emerging asset is actually equivalent to providing everyone with an opportunity to jump into a fiat currency system. In other words, the investment in the new cryptocurrency market represented by bitcoin is actually an investment that has gotten rid of the "control" of the fiat currency or escaped from the traditional financial system.
As Zhao Changpeng, the founder of Binance, said in an interview before: From a mathematical point of view, because the total supply of Bitcoin is limited, and the legal currency is unlimited. Therefore, Bitcoin has virtually unlimited growth potential compared to fiat currencies. At the same time, there is also a more radical voice that if the existing legal currency system continues to depreciate due to the central bank's aggressive printing of banknotes, then Bitcoin may eventually become a "pooling point" for all assets worldwide.
Earlier, in an interview with Bloomberg, Peter C. Earle, a researcher at the American Institute of Economic Research, stated that once monetary policy has reached a stage where "unlimited" banknote printing can be performed, gold is represented by precious metals and Bitcoin is represented by cryptocurrencies. Will serve as an important hedge asset against inflation.
In other words, when the purchasing power of the currency issued by the government drops sharply, investors will be forced to find new "safe havens" to protect their wealth. At present, Bitcoin is obviously a very good choice.