And to amend a bit, to give the whole perspective: And one of the triggers started when around 2005 the FED started raising interest rates.

Which it had lowered more dramatically due to 9/11.

https://www.bankrate.com/banking/federal-reserve/history-of-...

Let that sync in, is my 2c.

(Extra:The FED interest rates takes 2 years to kick in to Adjustable Rate Mortgages which where the first to fall.)

> And one of the triggers started when around 2005 the FED started raising interest rates

The fed did not cause the crypto crash. It didn't force people to gamble on cryptocurrencies. It didn't force them to not sell, at the top of the naked ponzi schemes they participated in.

Interesting.

Question, though, and coming back on topic: Did the rising interest rates trigger this (FXT)? There might be a path here, and it would not have the two-year delay of adjustable rate mortgages.

Cause, no. Make it more likely, along with the world situation we are in and the supply dysrhythmia, yes.

Recall FTX used a bunch of cash to save failing companies which would create systemic shock (ironic), acquire and invest lately, including in the Silicon Valley. My guess here: "1-2/3-4 Billion" is enough for liquidity, nobody is going to run on us, we are trusted, especially after us saving the world.

There was "bad event rolls" in the system and when they came, nobody can/will/would give them that amount of money.

I am sure in great times, they would also find liquidity/loans more easily -- which is what they are still trying to do. ("Everyone" is keeping cash to the chest, waiting to see what happens right now.)

Rising rates usually ends up showing us who was swimming naked.

The business models that relied on a perpetual supply of new capital, & other overly risky gambles become less attractive to investors when you can go get 5-7% on some boring bond with no risk.

You also have liquidation spirals as speculative investors need to sell asset X because of margin calls on asset Y. Which then causes a margin call on customer2 who owns asset X which has now gone down so they go sell some asset Z.. and so on.

Back then large percent of mortgages were adjustable rate, the amount of those now is a single digit.

https://i2.wp.com/financialsamurai.com/wp-content/uploads/20...

It was even worse than that. I worked for Wells Fargo doing credit checks at the time. The entire system was set up to rubber stamp loans without looking too closely. That'd be a problem for whatever downstream sucker bought it. At the time I had a bit of a robin hood attitude about it: if it's not illegal and follows policy that these subprime folks historically discriminated against get a bigger loan so be it. Now I have a more complex view on it, and see it as much more brazenly predatory.