The secured overnight financing rate surged Monday, indicating liquidity stress in the U.S. banking system.Signs of liquidity stress are emerging in the U.S. banking market, which may not bode well for risky assets such as bitcoin
On Monday, the secured overnight financing rate , which shows how much it costs for banks to borrow cash collateralized by U.S. Treasury securities overnight, rose to 5.4%, matching the six-year high reached on Jan. 2, according to Federal Reserve Bank of New York. The increase is a sign of tighter liquidity and constraints in overnight borrowing, a market dynamic last observed in September 2019, after which the Federal Reserve injected liquidity into the repo market, where institutions borrow and lend money for short periods by using Treasury securities as collateral."It is something for the market to worry about in the short term," David Brickell, head of international distribution at Toronto-based crypto platform FRNT Financial, told CoinDesk.
Renewed liquidity support by the Fed could bode well for BTC as it did after the coronavirus-induced crash of March 2020.in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.
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