US Federal Reserve’s First Rate Cut Catalyst for Sudden Bitcoin Recovery

Steven Anderson By Steven Anderson August 3, 2019 Off
US Federal Reserve

The crypto market gains in billions as Bitcoin moves back above $10,000.  The major catalyst for the price recovery of Bitcoin can be attributed to “U.S. Federal Reserve’s first rate cut.” Growth is slowing down in the world’s largest economy, and the interest rate cuts have provided for the sudden increase of Bitcoin price.

Mati Greenspan recently stated, “Given the connection that crypto influencers have been making between economic stimulus and crypto lately, we will probably see a much swifter reaction in bitcoin’s price than we usually do.”

The price of the Bitcoin was at $10,500 on the Bitstamp exchange based in Luxembourg. The overall Bitcoin and cryptocurrency market has added to $10 billion in its total value in the past few days.

New coins are in due to come into the market for the next 120 years.  The cost of borrowing has been reduced in the Fed.  The supply of Bitcoin is almost exhausted.  About 85% of Bitcoin supply is in circulation as of August 01, 2019.

Jack Dorsey in the second-quarter earnings report of Square revealed, “During the quarter, bitcoin revenue benefited from increased volume as a result of the increase in the price of bitcoin, and generated $2 million of gross profit.”

Dan Morehead claims that there is a good shot for the price of Bitcoin to touch $42,000 in the year 2019. The most essential macro-economic factor which will affect the price of Bitcoin is considered to be Monetary easing.

The Delphi Digital report stated, “First, and arguably most important, sentiment from global central banks took a drastic turn towards more dovish monetary policies.” The market participants are currently being prepared for more interest rate cuts and additional stimulus measures from the Fed, ECB, BOJ, and PBOC.

The ongoing trade between China and the U.S. is provided as the rationale for monetary easing.  The risks associated with the no-deal Brexit due October and GDP growth in Germany are also the chief reasons cited for monetary easing.

It is also expected that if the foreign holders of the U.S. treasuries will lose faith in the repayment viability of USD, then the sentiment towards the dollar will shift drastically.

The report further stated that there are only a handful of assets which are sitting outside the purview of any single government.  Therefore, the demand for these non-sovereign assets will be greater in the decades to come depending upon the effects of the unconventional monetary policy shake out.