Bitcoin could be the prime benefactor of possible U.S negative rates
When Bitcoin surged back above $9500 post-halving, there was a sense of anticipation that the asset would go on to crack the resistance at $10k without the bullish sentiment of the halving
However, the aggressive rally finally spiraled out and Bitcoin depreciated again on 15th May. With the halving well behind in the past now, it is a question of what’s next for Bitcoin as the community tried to identify the next impetus for a bullish run.
According to a recent analysis revealed by Stack, it was indicated that a major development with the traditional asset class may indirectly fuel Bitcoin’s next price pump. Even though the digital asset industry was back to its feet after the ‘Black Thursday’ event in March, the conventional stock market was yet to find its bearings.
Recent news from June Fed funds had also suggested that if the situation does not improve, the chances of facilitating negative interest rates are a real possibility. This would see the United States join the likes of Japan and European Central Banks, which are already incurring rate cuts. Now, even though the Federal Reserve continues to dismiss the likelihood of it, the market suggested otherwise, as the situation seemed sour every passing day.
Where does Bitcoin fit in between all this?
Now, in simple terms, whenever negative interns are implied by the Central Banks, it is indicative of a weakened of a declining economy. At the moment, people and businesses were keeping their capital flow limited instead of spending, which is limiting the proficiency of the economy and negative rates would encourage the spending of cash, since the value fiat will decrease. The report stated,
“Fuelling the financial bubble further is an estimated amount of $3.5 trillion that is being printed by the US fed and injected into the monetary system. These actions are detrimental to the economic environment, where it could lead to a deflationary spiral.”
Now, amidst such turbulence, eyes are already towards the prospect of investing in digital assets, particularly Bitcoin. The resilience shown by BTC during the past couple of months has taken the attention of accredited investors, which can be verified by the all-time-high in CME Open-Interest for Bitcoin Futures.
Considering Bitcoin still holds legitimate attributes of an uncorrelated asset, it can be speculated that institutional fund manager would possibly consider hedging digital assets into their portfolio during this time.
Paul Tudor Jones, the billionaire founder of hedge fund Tudor Investment is the prime example, who recently revealed that Bitcoin is currently part of his portfolio. Jones, also suggested if he is forced to forecast the surviving asset during inflation, his bet will be Bitcoin.
Even after the halving event, times remain very interesting for Bitcoin and, 2020 could possibly elevate Bitcoin’s status as a mainstream asset by the time we enter 2021.