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The cryptocurrency market soared in the past 24 hours, targeting the coveted $1 trillion mark in terms of total capitalization. Leading the way is Ethereum, which is up over 11%, while Bitcoin also pumped by a considerable 5%.
Commenting on the matter was the former CEO and one of the co-founders of BitMEX, Arthur Hayes, who provided his reasoning for the most recent increase.
Bitcoin and Ethereum Pumping
Yesterday, the cryptocurrency market finally made a move and it was to the upside. Bitcoin soared by around 5% in the past 24 hours, currently trading at around $20,300. It is now imperative for the bulls to defend this critical level which contains multiple technical, as well as fundamental resistances.
Ethereum also soared and is currently found above $1,500. Interestingly enough, this is the highest price the cryptocurrency has reached since The Merge.
The rest of the market also followed, pushing the total capitalization towards the coveted mark of $1 trillion.
Why The Pump?
The recent pump sent the derivatives market into a disbelief as over $800 million worth of predominantly short positions were liquidated.
Commenting on the matter was Arthur Hayes – the CEO and co-founder of the popular derivatives exchange BiteMEX. According to him, the US government has much to do with the recent pump. He explained that the US Treasury “is thinking about supplying the market with more short-term T-bills to alleviate a shortage.”
The veteran explained that money market funds “like short-term T-bills, but there are ain’t enough so they park their money in the Fed’s reverse repo facility. It earns a similar yield. Credit risk is also a factor…”
Hayes explained that there’s $2.2 trillion sitting in thee Fed’s Reverse Repurchase Facility (RRP) and that if this number goes down, the market will continue increasing. However, there’s also a catch.
These buy backs and re-issues of new on-the-run T-bills have not actually happened yet. If this is just a trial balloon and it pops, make sure to put on your adult diaper for the reversal.
