Bitcoin to get a boost from the Fed this week
Bitcoin will likely receive a price boost by the U.S. Federal Reserve today.
During the U.S. central bank’s meeting on Wednesday it is highly likely it will slash interest rates by perhaps a quarter of a percentage point.
This follows the July rate cut, the first one in a decade, due to the trade war tensions with China.
As such, and as I talk about in this video, Bitcoin – the world’s largest cryptocurrency by market capitalisation – will likely break out of its recent sideways trading pattern and receive a boost by the rate cut.
The reason for this is because a rate cut lowers the incentive to keep fiat currency. Also, higher inflation usually results from a rate cut, thereby lowering the purchasing power of traditional currencies.
Therefore, Bitcoin and other decentralised cryptocurrencies, become more appealing and the price will edge upwards accordingly.
As I said last month, I believe Bitcoin will soon reach $15,000 for key reasons.
The first is geopolitical issues – such as the trade war between the U.S. and China as well as Brexit – are escalating. Therefore, investors will increase exposure to decentralised, non-sovereign, secure digital currencies, like Bitcoin, to safeguard them from traditional market turmoil.
Second, performance is improving all the time thanks to technical network improvements. Indeed, Bitcoin’s hash rate surpassed another record high recently, driving investor confidence.
Third, the price of Bitcoin will rocket due to the 2020 Bitcoin halving. Every four years the code for mining Bitcoin halves, with the next one scheduled for May next year. When the code halves, miners receive 50 per cent less coins every few minutes. Over time we’ve seen a substantial surge in Bitcoin following halving.
Fourth, people are constantly becoming more aware of cryptocurrencies. Bitcoin in particular is increasingly part of mainstream finance. Not just in the financial sector, but also within the technology and retail sectors.
In addition, inflation and current government monetary policies are also pushing investors towards Bitcoin the broader cryptocurrency market.
It’s my view that cryptocurrencies, now widely perceived as the future of money, to do well as the global economy decelerates and central banks ease monetary policy in response.