Replying to Avatar Toxic Bitcoiner

Rehypothecation during a bull mutes upwards price action (ex. FTX). How does rehypothecation (mechanically) affect downwards price action during a bear? Outside of the psychological fear-contagion during a fund, exchange, etc collapse.
Avatar
Brett Phillips 10mo ago

Possibility?: declining prices trigger liquidation levels and cascading sells.

Flip side could be forced buying to maintain LTV ratios could provide support in a bear.

Reply to this note

Please Login to reply.

Discussion

Avatar
Toxic Bitcoiner 10mo ago

The first part is caused by long leverage.