How Will the US Federal Reserve Rate Cut Affect Bitcoin?

Mar 06, 2020 at 08:25 // News
Author
Coin Idol
The S&P 500 is at its worst since the financial crisis

Correspondence of interest rate cuts by the US Federal Reserve  to respond to the recession crisis caused by the global spread of new coronavirus (COVID-19) is growing, and interest in the cryptocurrency market is increasing.

The Fed's interest rate cuts could lead to the stabilization of traditional financial markets, including the stock market, as well as new inflows into the bitcoin market that is about to have a half-life.

The S&P 500, which measures the performance of the top 500 US companies, is at its worst since the financial crisis, falling more than 12 percent from two weeks ago.

In comparison, gold, a leading safety asset, rose more than 5% this year, reaching a 7-year high on the 24th of last month.

However, BTC, which has been raised in the claims of a safe asset like gold, has fallen about 14% over the past two weeks as opposed to the price trend of gold.

In this situation, the Fed's rate cuts increase the likelihood of moving investors from safe assets to high-risk, high-yield assets, where Bitcoin could still be classified as a risk asset in recent trends.

Thus, this could bring investors seeking profit from the bitcoin market due to recent losses.

In addition, the expectation of price increases due to the bitcoin half-life scheduled for May will add to the strength of the BTC market.

No Crypto Coronavirus Impact

Recently, Ethereum founder Vitalik Buterin expressed the view that cryptocurrency is not affected by external factors such as coronavirus.

According to YouTube, Buterin responded to a user's question about a recent situation in which gold and cryptocurrency prices were reversed on Twitter the day before, according to his analysis, the cryptocurrency market is not affected by coronavirus. Replied.

Bitcoin has plunged to nearly $300 in recent three days amid the turmoil of other global financial markets due to the recent outbreak of coronal virus from China, raising questions about its position as a safe asset such as gold among investors.

Gold investor Peter Schiff, famous for his BTC critics, argued that Bitcoin was not qualified as a security asset.


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