• The Federal Reserve and five other central banks have announced they will introduce daily swap lines in order to provide additional liquidity.
• This move is intended to help distressed banks get access to dollars on a daily basis, increasing liquidity in the short-to-medium term.
• Bitcoin has been feeding off this increased liquidity, with its price hitting $28,000.
The Fed Has Capitulated – Daily Swap Lines Introduced
The Federal Reserve and five other central banks have announced that they will be introducing daily swap lines as part of an effort to provide additional liquidity. These other central banks include the Bank of England, the Bank of Canada, the European Central Bank, the Swiss National Bank and the Bank of Japan.
Benefits for Distressed Banks
The primary goal of these swap lines is to enable distressed banks to get access to dollars on a daily basis which can increase liquidity in the short-to-medium term. This could result in billions if not trillions being injected into the market over time.
Bitcoin Feeding Off Increased Liquidity
As a result of this increased liquidity, Bitcoin has been able to feed off it as evidenced by its price hitting $28,000 recently. It remains to be seen how much further prices can go with this additional liquidity providing support for Bitcoin’s long-term growth prospects.
Analysis From CryptoSlate Research Analyst
CryptoSlate research analyst James Van Straten commented on the news saying that he sees Bitcoin as „the greatest invention of the 21st century“. He believes that this move by central banks could open up more opportunities for Bitcoin and other cryptocurrencies in terms of adoption and usage going forward.
Disclaimer
CryptoSlate does not endorse any project mentioned or linked to in this article nor does it take responsibility should you lose money trading cryptocurrencies.