One of the most famous statements of Bitcoin is that it is not correlated with the Goings-on on Wall Street and the traditional world. Although this was, apparently, for much of the first years of the case, affected in the last few years, macro-economic and geopolitical Trends on the crypto-market.
This was in March, reinforced, as it was a world in which investors rushed in all markets, to sell their assets for Cash. 12. March fell stock, commodities, Bitcoin, and even precious metals (Gold, silver) in the same step and experienced the worst trading days for years. This day has since been referred to as “Black Thursday”.
But the effect of the traditional financial industry has on Bitcoin, could be a good thing, as the Cryptocurrency has reacted due to the easing of monetary policy is extremely positive and the course caught up losses from the March virtually. Now, negative interest rates are even in the US in the conversation!
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Negative interest rates in the United States
In the last few weeks it has developed the worldwide economic situation getting worse, in spite of the 35% rally in the S&P 500, and similar gains in other assets, such as Bitcoin and Gold.
Let alone of local companies due to the global shutdown on the brink of collapse…
These reverse Trends, the Central banks and governments of the world reacts, and more monetary incentives than ever before, implemented to protect the company and to save. In just the past two months, the US Federal reserve has increased its balance sheet to more than 2.3 trillion US dollars, an increase of 50% compared to the balance at year-end 2019. But this is not enough, analysts say.
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Narayana Kocherlakota, an economist, who was in the six years to 2008 as President of the Federal Reserve Bank of Minneapolis, wrote recently in a Bloomberg article with the title “the Fed Should Go Negative Next Week,” in which she outlined a case for the U.S. Central Bank to bring interest rates into the Negative. This was picked up at the end of last year by Alan Greenspan, a former Fed Chairman.
Tyler Winklevoss, co-founder of Gemini, and a prominent Bitcoin bull, commented on the article with the following Tweet, and stressed how much he considers this step to be unprecedented, and potentially dangerous.
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Why so bullish on Bitcoin be?
Although Bitcoin has been correlated currently in a strong way with the stock market, brewing, nevertheless an interesting development. While the Central banks Print self-indulgent money is the Cryptocurrency Bitcoin is becoming increasingly scarce.
Because in about 16 days, the so-called Bitcoin Halving takes place, in which the Block-reward, get the Miner, if they find a Block, will be halved from 12,50 6,25 Bitcoin. Even if many argue that this Event is already priced in the course, one must not forget that Bitcoin is designed exactly opposite to the traditional market. Bitcoin is still scarce, while the printer of the Fiat-annealing currencies.
Furthermore, a look at the Bitcoin exchange rate lows of recent years is enough. As you can see in the graphic below, a positive Trend in the Bitcoin exchange rate seems to be low levels emerge, and it is rare that the Low of the previous year is below. In the year 2020, we have had so far a Low of $3,600 and a lot of analysts are of the view that this level is not reached.
Why Bitcoin is the solution?
In contrast to cash, the storage could be due to negative interest rates will soon be expensive and savers loaded, Bitcoin is due to the reductions by a relatively deflationary currency.
In addition, it is assumed that with negative interest rates and an increasingly bizarre monetary policy, the slow (but getting faster) depreciation of the Fiat currency goes hand-in-hand, which should prove to be an advantage for a limited and decentralized form of money like Bitcoin or Gold.
While savers may be punished in the future for the store of the own money, to do in the crypto market, more and more ways to get returns on crypto-systems, such as the action of Stormgain, in which you can get a 10 per cent interest from a Deposit of 500 US dollars.
The crypto market is innovative and is still at the beginning of his ways, but the opportunities already today, are not to be underestimated.
Therefore, I am long term extremely bullish with regard to the development of Bitcoin and other Top cryptocurrencies. Strong price movements, no matter what, there will always be, but a long-term perspective, I personally see only one Trend: upward!
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