There's a logical flaw in the first statement, and it indicates an incomplete understanding of how this works, or the author does understand and is knowingly spreading FUD. TL;DR, a significant downturn in the market or crypto prices is a catalyst.
**SHFs can be bled dry. ** It's not about having cash on hand, either- it's about the holdings they have as collateral to back up the "leveraged" bets (deliberately choosing those words- this is a little more than buying on margin).
The vast majority of that collateral held by SHFs depends on a stable market with growth: stocks. Another big part is cryptocurrency. HFs are the single biggest owner and driver of crypto values, and able to trade in crypto at better than 100x leverage (how is a very complicated shell game).
A significant drop in the value of the collateral will initiate margin call.
The economy is being artifically pumped and there is no graceful way out. Near-record inflation, record home prices, near zero interest rates and extreme cash liquidity, record overnight reverse repo and no interest rate increase in sight. That's like mainlining speedballs right into the market's jugular, and it will break down- it's unsustainable. When it does, it won't be long until margin calls start causing liquidations.
There's a logical flaw in the first statement, and it indicates an incomplete understanding of how this works, or the author does understand and is knowingly spreading FUD. TL;DR, a significant downturn in the market or crypto prices is a catalyst.
**SHFs can be bled dry. ** It's not about having cash on hand, either- it's about the holdings they have as collateral to back up the "leveraged" bets (deliberately choosing those words- this is a little more than buying on margin).
The vast majority of that collateral held by SHFs depends on a stable market with growth: stocks. Another big part is cryptocurrency. HFs are the single biggest owner and driver of crypto values, and able to trade in crypto at better than 100x leverage (how is a very complicated shell game). A significant drop in the value of the collateral will initiate margin call.
The economy is being artifically pumped and there is no graceful way out. Near-record inflation, record home prices, near zero interest rates and extreme cash liquidity, record overnight reverse repo and no interest rate increase in sight. That's like mainlining speedballs right into the market's jugular, and it will break down- it's unsustainable. When it does, it won't be long until margin calls start causing liquidations.