A few days ago, the US lowered bank interest rates again, an issue that seems to put Bitcoin name as a safe haven for centralized financial system decisions, and will have a direct impact on the rise in the price of digital currencies.
While interest rate cuts may be a downside for digital currencies, some experts believe the network’s impact on prices is somehow positive.
Frances Coppola, an economics writer, says the slowdown and lower interest rates in the past decade have caused bitcoin prices to rise. He states:
Lowering bank interest rates will drive up commodity prices, as does bitcoin.
According to Coppola, the fact that bitcoin is not correlated with the mainstream of the economy at the moment, and that the way it is, is not compatible with the reality ahead of us, and as we saw last week, the Coronavirus caused 50% of bitcoin to decline. Be.
Central banks cut their interest rates over 2009~2015, which led the S&P500 index to rise more than %200. Gold, as a record-breaking safe haven for capital, fell from $ 800 to $1921 per ounce over three years, and finally plummeted to $1050 in December. Since the last recession we saw in the year 2008, bank interest rate cuts have helped monopoly businesses increase their wealth and private wealth reaches $ 166 trillion by half a percent.
Coppola goes on to say that printing money in developed economies is thought to lead to hyperinflation, and the idea that some Bitcoin fans have in mind is wrong:
There is no evidence that interest rate cuts cause hyperinflation. The purpose is to put pressure on investors to move to high-yielding assets such as bitcoin. These assets fluctuate despite the high return on investment. That’s why what gets you is the bubble (unrealistic price increases) and bitcoin is included.
In the current situation, the Federal Reserve, the Federal Reserve, has failed to stabilize the market and has been lost amid cash inflows. The Federal Reserve to counter the outbreak of the Coronavirus announced it would buy $ 700 billion in bonds and cut its interbank interest rate by 0.0 to 0.25%.
Simon Peters, a market analyst at eToro, says that as soon as the wave of covid-19 in China subsides, investors will move to Bitcoin. Peters further added:
The investor thinks to himself, “Well, now that I have so much cash and what to do with the money supply growing? Where should I invest my money? It is not right to hold cash in these circumstances, as the value of these currencies is declining and your purchasing power is less and less, so what to do with this money? This is where Bitcoin and other assets such as Bitcoin come from.
The Cantillon Effect is the change in the relative price of an asset that is caused by a change in the money supply procedure. Gabor Gurbacs, VanEck’s manager and Pierre Rochard, analyst, say that assets such as stocks and real estate are overvalued at this time, which means that bitcoin assets are more attractive. They will be in advance.
Alex Mashinsky, CEO of Celsius lending platform, says:
Based on what is happening in connection with the mainstream of the economy, bitcoin continues to be considered an asset for the day. [Central Banks] are printing money that didn’t exist until yesterday, giving everyone that money. But we can’t say we have Corona, so we have to produce another five million bits or say we have to vote for the second period, then we produce another ten million bits. [Indicates money supply increases but bitcoin supply constant]
Caitlin Long, CEO of Avanti Economic Group and one of the key contributors to the legalization of the Blockchain in Wyoming, says:
History will not support the decision of the Federal Free Market Committee to reduce banks’ liability.
According to Long, central banks are implementing the same policy they always implement, and that policy doesn’t work. He adds:
If you compare the amount of facilities that are intended to cope with the current situation with those of the first and second quantitative facilities in the previous years, you will find out its extent. This time they implemented several small facilities, the same size as the first prototype in just one day, while at that time, few facilities were operational in a few months.
The first quantitative facility program lasted from December 2008 to March 2010. During that time, the Federal Reserve bought 600 billion mortgage securities and another 100 million bonds.
Long, for the first time in several years, said he bought Bitcoin last week after the market crash. He also added that this was only a personal move and should not be considered an investment proposal. He added:
I only know that Bitcoin is an asset that you won’t be credited with buying it. I prefer to diversify our portfolio of assets with a diversified asset that I don’t credit to someone I don’t know who can borrow.
While traditional markets have given a little leeway, Bitcoin is moving in the opposite direction.
In two months, bitcoin’s supply will be halved. This halving in supply is due to a function called Hawking or halving the extraction reward. Alex Blum, Managing Director of Fintech Two Prime, said about Hawing:
As the US government seeks to print another trillion dollars, this will accelerate the process of rising inflation and devaluation. On the other hand, we still have a $ 5 million limit for bitcoin. Howling should happen when it should.
According to Coppola, bitcoin scarcity and its relationship to the value of this digital currency is an ideological expression of faith in it. He adds:
There are always people who believe that scarcity alone creates value. In fact, something so rare that no one wants to buy it has no value. Such things have to be criticized.
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