The US Federal Reserve Has Lowered Emergency Rates: How Will This Affect The Economy And Bitcoin?
he upcoming halving of Bitcoin is causing a mixed reaction in the cryptocurrency community. The situation is heated up by by the fact that it is impossible to accurately predict how the split of Bitcoin into two in May 2020 will affect the cryptocurrency market. The Bitcoin early bull is a highly anticipated process and some countries are already taking measures aimed at regulating digital currencies. In particular, the US government was one of the first to respond to the upcoming halving of Bitcoin.
At the initiative of the Federal Reserve, emergency rates were reduced by basis 50 points. These measures were taken in connection with the spread of coronavirus, in particular, those threats that the virus potentially poses to the global economy. This was announced on Twitter by Anthony Pompliano, co-founder of Morgan Creek.
How will lower rates affect the economy?
First of all, a decrease in rates will affect the banking system for issuing credit funds. It is assumed that interest rates on loans will be reduced. This can positively affect the financial condition of the country, generate a greater flow of money into the economy. It is also envisaged that paper money will increase.
Anthony Pompliano notes that the time of the rate cut was agreed in advance at the time when the economy will undergo drastic changes or the volume of Bitcoin will be reduced. Bitcoin halving, halving the most sought-after digital currency, will “play into the hands” of the US and world economies.
How will lower rates affect the stock market?
Jimmy Song, one of the developers of Bitcoin, also commented on the relationship between lower rates and the state of the stock market. He believes that we can witness the growth of shares due to lower rates and an increase in the volume of fiat funds. Entrepreneurs are interested in investing in stock exchanges or real estate. Thus, the circulation of paper money in the market will increase.
How will lower rates affect cryptocurrency?
Many experts are trying to deliberately evaluate how Bitcoin will respond to lower rates and what changes we can expect in 2020. It is worth considering that in the past few years, Bitcoin has “looked back” at what is happening on the stock markets and correlated its condition depending on the trends prevailing there. Thus, we can assume that the growth of the stock market will trigger a rise in the price of Bitcoin.
Jimmy Song also sees a positive trend in the international currency market. He notes that Bitcoin has become more viable and significantly strengthened its position among other digital assets. Thus, the halving of this cryptocurrency can become a radically new step in the success of Bitcoin.