The aggressive weakening of the US Central Bank (Fed) could support the bullish price trend of Bitcoin at least until 2020. In the meantime, the crypto-currency could also be used by the upcoming Halvening Event in parallel with a boost.
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The FED lowers the interest rates for the first time in over a decade
In the last meeting in July, the Federal Open Market Committee (FOMC) lowered the Fed funds rate 0.25% to 2.00 and from 2.25%. This was the first interest rate cut since December 2008. The us Central Bank responded to the massive financial crisis through the real estate bubble.
In General, if a Central Bank lowers its key interest rate, the national currency cheaper. It happens, because investors will find it for deposits less attractive. Consequently, the cash owners are more likely to turn to investments as austerity measures and the local businesses get a strong pulse.
In addition to the exchange, the Store-of-Value systems are the reductions big winner of interest. Crypto-currencies such as Bitcoin also fall into this category.
While Bitcoin could be a great foreign exchange instrument, many investors in the crypto-currency, mainly because of their ability to store value over the long term and to achieve a generous return on investment.
A cheaper Dollar will force many institutional investors to take Bitcoin investments. The Fed Chairman Jerome Powell said that the Fed had to support the US economy through lower interest rates in the midst of the trade war and the fear of a global recession.
Further rate cuts could benefit Bitcoin bulls by 2020
However, the pressure on the Fed is now large, as many investors expect the Central Bank to be more aggressive in stimulus measures. US President, Donald Trump was disappointed that the Fed cut interest rates only by 0.25%:
….As usual, Powell let us down, but at least he is ending quantitative tightening, which shouldn’t have started in the first place – no inflation. We are winning anyway, but I am certainly not getting much help from the Federal Reserve!
— Donald J. Trump (@realDonaldTrump) 31. July 2019
Since the trade relations between the United States and China worsen again, it will need the U.S. economy to a more visible support through lower interest rates and perhaps even a quantitative easing.
Morgan Stanley expects that by the end of this year, two more interest rate cuts and a further four by the end of 2020. So the Fed rate is, according to information supplied to the Bank is close to Zero.
The overall picture suggests that Bitcoin is obtained through the economic recession and the measures taken by the Fed and the European Central Bank (ECB) received a significant boost.
Text evidence: bitcoinis, ANATOL ANTONOVIC