Building a Business Empire with my Technological System

Chapter 83  The Looming Fall of Crypto

Outside the factory, Michael received a call from Bridget.

"Hey Michael, just checking up on you. So how was the factory? Is it ready?" Bridget asked.

"Next week will be the start of the production," Michael replied confidently. "So how was Berlin?" "Just doing some important matters here, mostly business," Bridget simply answered. "Anyways, we are going to prove that your solar panel is indeed lucrative, to prove it, we must present a quarterly report and it must exceed the projected profit margins. If we can do that, we'll solidify not just the company's future, but also its reputation as a leader in the industry,"

Michael nodded to himself, the weight of the task ahead not lost on him. "Understood. I'll make sure the operations team is on top of everything. We'll optimize the production lines and cut any unnecessary costs. The goal is efficiency and quality, not just output numbers." "And Michael, I need a report on that stock, the shorting of the cryptocurrency," Bridget shifted to another topic.

"Well about that, let me go back to my truck and open my laptop," Michael said, already walking back toward his vehicle. Once inside the truck, he booted up his laptop, a sense of urgency settling over him as he pulled up the necessary files. The crypto market had been volatile, and their position needed to be managed carefully to ensure maximum return on their strategy.

"Okay, Bridget, I'm looking at the numbers now," Michael began, his eyes scanning over the charts and figures. "The whales are starting to dump their holdings, which is flooding the market with supply and driving the prices down. It's triggering a cascade of stop-loss orders and margin calls, accelerating the decline. We're seeing a sharp downturn in market sentiment as well, indicated by the social media sentiment analysis and the rise in negative news coverage."

He paused to switch screens, bringing up a complex array of graphs and data feeds. "The liquidity in the major exchanges is thinning out, too. It's a classic liquidity crunch. With the hash rate also taking a hit recently due to new regulations in Asia, Europe, and the United States, it's looking like a perfect storm for a market crash. Our short positions are in the green, but we need to monitor them closely. I'll adjust our exit strategy to ensure we maximize our gains before the market corrects itself, which it inevitably will."

Bridget was silent for a moment, absorbing the information. "That's exactly the kind of insight I was hoping for…" As he was doing that, Michael received an email from the JPMorgan Chase & Co. In that email, he was asked to call them immediately about an urgent matter concerning the credit default swaps they had purchased. Michael's expertise in financial instruments was about to be tested.

"I'll have to call you back, Bridget. I've got an urgent message from the bank regarding our CDS positions," Michael informed her, his voice steady but with an edge of concern.

"Understood, handle it. We can't afford any slip-ups with the bank," Bridget acknowledged the gravity of the situation. "Call me once you've sorted it out."

Michael ended the call and dialed the number provided in the email. The phone rang briefly before a representative from JPMorgan answered.

"Mr. Reyes, thank you for calling back promptly," the voice on the other end was crisp and business-like. "We've noticed the market in the crypto market going crazy today…"

"Yup, and I think the monthly premiums we are paying you are starting to bore fruit," Michael joked. "Well, about that. I have to discuss something with you. The situation with cryptocurrency is, of course, volatile, but I must stress that we should not overstate its impact on broader financial markets or your CDS positions. The crypto market, while sizable, is still relatively isolated from the traditional financial sectors."

Michael, already prepared for such a response, countered confidently. "I appreciate the perspective, but I must disagree. The financial ecosystem is more interconnected than ever. While crypto itself may be isolated in theory, the reality is its stakeholders are not. Major investors are diversified across crypto and traditional assets. Their reactions to movements in one market can influence their behavior in another."

He paused, ensuring the representative was following his line of thought. "Furthermore, the sentiment surrounding crypto doesn't exist in a vacuum. Negative sentiment can bleed over, affecting investor confidence as a whole. This, coupled with the tightening regulations you mentioned, can create ripples that affect all our positions. It's a domino effect, and we're seeing the first ones fall."

The representative on the line took a moment, likely considering Michael's arguments. "I see your point, Mr. Reyes. You're suggesting a more holistic approach to risk assessment, considering the psychological and regulatory aspects as well."

"Exactly," Michael affirmed. "Every piece of the financial puzzle is connected. Ignoring these connections, especially in risk management and when dealing with instruments as sensitive as CDS, could be an oversight we can't afford. I am monitoring these connections closely, and I suggest the bank does the same. It will influence our strategies moving forward."

After saying that, Michael was frustrated at the bank's attempts to undermine his position. Well, they are afraid because once the market falls, they will have to pay him two hundred million dollars which is a significant sum of money. Michael knew the importance of holding his ground, especially when substantial financial gains were at stake.

"Look, I don't have to remind you that in the contract before I acquire the CDS, in case the crypto market falls at a certain threshold which according to the analytics going there at the moment's notice, you will pay me two hundred million dollars."

"Yes Mr. Reyes, we are aware of that. But there is still a possibility that it may not drop below the threshold. So how about we buy your CDS back in exchange for let's say 70 million dollars?" "The fact that you are offering me that amount of money indicates that you are indeed worried about the potential fallout. Your offer to buy back the CDS at 70 million is appreciated, but it falls short of the potential payout, and more importantly, it doesn't align with our risk management strategy. We're prepared to ride out the volatility because we understand the underlying factors at play here. The regulatory changes, the market sentiment, and the actions of major players all point to a significant shift. So, while I appreciate the bank's position, I must decline your offer. We will maintain our current stance and monitor the situation closely. If the market behaves as we anticipate, then the contract will stand as agreed."

The JPMorgan representative was silent for a moment before responding. "Understood, Mr. Reyes. We respect your decision and will continue to monitor the situation on our end as well. Should you have any change of heart or need to discuss further, please do not hesitate to contact us." n/ô/vel/b//in dot c//om

"Thank you for understanding. I expect JPMorgan to honor the terms of our agreement, as we will honor ours. Good day," Michael concluded the call. "Yeah how about that," Michael said, laughing.