Wilshire Phoenix CEO comments on Fed’s injection of $168B funds into the market


  • The US Federal Reserve pumped $168B into the financial system amidst plummeting markets. 
  • Bill Herrmann, CEO of Wilshire Phoenix, said that this move by Fed is small when compares to the grand scheme of things.

Recently, the US Federal Reserve has injected $168 billion into the financial system, correlating to Bitcoin’s present price drop. Speaking about this action of Fed’s, Bill Herrmann, CEO of alternative investment firm Wilshire Phoenix, said:

So long as the broader markets keep falling – expect the same out of Bitcoin.

Due to the Coronavirus outbreak and fears of oil trade wars, traditional markets have plummeted in recent times. According to a CNBC report, on March 12, the Dow Industrial Average (DJI) fell 10%, making it one of the most disastrous days the US market has witnessed since the Black Monday crash of 1987. Bitcoin suffered a similar fate, dropping from $6,000 to $3,850 on the same day.

To fight the falling markets, the US Fed injected cash worth $168 billion into the financial system on March 10. That amount totals about 82% more than all the money currently invested in Bitcoin. This market intervention by the US Fed dates back to September 2019. Herrmann said:

The Fed restarted repo operations last September soon after money-markets issues triggered a substantial loss of control over their interest-rate target.

The repo operation is meant to take in Treasuries, mortgages, and agency securities in exchange for cash. It’s basically a loan to a bank, collateralized by the aforementioned bonds. I know the Fed had hoped to keep this a temporary measure, but hope is often not a very good strategy.

He said that this latest move made by the American Fed is very small compared to the grand scheme of things.

The latest rounds of injections are like throwing pennies at a freight train and expecting it to stop — it’s simply not enough funds. My best guess is that the Fed was trying to instill confidence in the system, but what they need to do though is to stop thinking like academics and actually do something meaningful.

The CEO concluded by adding:

It may sound crazy, but I think it takes $700bn to over a $1tn to stabilize the markets. The last few weeks are a prime example of why digital assets, namely Bitcoin, have a place in the global markets.


 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Cryptos feed

Latest Crypto News


Latest Crypto News & Analysis

Editors’ Picks

Bitcoin may extend the recovery once Gold resumes the rally

Bitcoin has been creeping higher towards $12,000, ETH struggles at $400, while some altcoins rush forward to new highs. Thus, Bitcoin Cash and Monero gained 10% in the recent 24 hours, while EOS increased by 6%. 

More Bitcoin News

XRP/USD daily bull flag awaiting confirmation to breakout above $0.346

XRP/USD is trading at $0.309 while daily EMAs remain far away from the price. The daily bull flag is the most important pattern for XRP in the short-term. XRP continues fighting to remain above $0.30 ...

More Ripple News

Grayscale wants to register its Ethereum-based trust with SEC

Grayscale Investments submitted an application with the US Securities and Exchange Commission to register its Ethereum-based Trust. The company emphasized that the filing is voluntary, however, the registration will entail additional compliance requirements.

More Ethereum News

How long can TRX/USD sustain this 6-months ascending channel?

Tron price action has continued to take down key barriers from the massive losses in March. Even though the recovery has been as rapid as witnessed in other altcoins, TRX/USD price action speaks slow and steady out loud.

More Tron News

BEST CRYPTO BROKERS/EXCHANGES

Bitcoin Weekly Forecast: BTC hit the pause button before a decisive breakthrough

Bitcoin lived through a wild roller-coaster move during the previous weekend. The coin hit the new 2020 high above $12,000 and crashed to $10,500 in a matter of hours. 

Read the weekly forecast

BTC

ETH

XRP