BTC - As the U.S. moves towards lower rates, will that benefit Bitcoin?
The US is likely on their way to much lower rates...
How low you might be wondering?
Well, if The Donald gets his way, much much lower.
The US has cut rates now at all three of the latest FOMC policy meetings.
Not drastic cuts, as each one has been by .25 basis points each time, but cuts none the less.
This is a big deal because this time last year they were talking about raising rates.
The Donald wants more...
Even with the latest rate cuts, check out how The Donald feels about it:
(Source: https://twitter.com/charliebilello/status/1190628561683722241)
Lower rates than Germany and Japan?
That may not sound like a big deal until you look at where rates are over there and compare them to the U.S.
Compare the yields on 2-year bonds:
- Germany: -0.66%
- Japan: -0.27%
- U.S.: 1.55%
But it's not just the 2-year...
They are seeing negative rates just about across the board.
Check out the 10-year:
- Germany: -0.38%
- Japan: -0.18%
- U.S.: 1.71%
For the US to get to those kinds of levels we would need to cut rates a lot more than we have.
Right now the prediction markets are saying we likely won't cut rates at the December meeting but likely will at the next couple policy meetings after that one.
Though, if Trump has his way he will push for a rate cut at the December meeting as well.
In this environment, a negative rate environment, I would expect bitcoin to look even more attractive than usual.
This kind of environment forces money out of savings and into assets.
Something that should be good for stocks and other commodities/assets like bitcoin.
Combine this kind of environment with the halving coming in less than 7 months and we should have a very exciting next 18 months or so.
Stay informed my friends.
-Doc
Help Full analysis for blockchain market spatially for bitcoin.
It should be a good macro environment for bitcoin, yes.
lower rates, what could go wrong
Nothing, everything is fine. Negative rates are normal.
Hello dear friend @jrcornel.
In practice, when the Fed lowers the reference rates, the interest on loans also decreases, giving companies more reasons to invest and consumers a push to spend.
Then we may see that part of these resources are taken to the crypto market. The big limitation would be in the low crypto adoption rate. There are still few ordinary citizens and even large investors who prefer to invest in cryptography. Since the middle of this year we have witnessed a smear campaign against cryptocurrencies.
On the other hand it is interesting that the United States is in need of reducing rates, this shows that the growth prospects are weaker, would be receiving back the effects of its own trade restrictions.
All this is part of the dynamics of the fiduciary financial market.
Will BTC benefit? This is definitely very likely to happen, but what we cannot predict are market volumes.
All best, Piotr.
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