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Did Macro Kill Crypto? with MacroAlf
Bankless
Is the Base of the Pyramid Shaking?
If you shake the core of the system, what happens is that the most exposed and fragile fringes of the market tend to suffer first. So we are not only making it shake when it comes to price volatility, but we are also making it less lubricated effectively by removing the amount of bank reserves from the system. Do you remember the 2019 repo blow off? That was mostly because bank reserves were dropping very, very aggressively as the Fed Reserve was ongoing with quantitative tightening. The more you shrink this base, the more banks will become more risk-averse and more prudent with their liquidity providing exercise.
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