In the past few weeks, a lot of uncertainty and fear have arisen on the financial markets. Of course, this is primarily due to the policy of current US President Donald J. Trump. It is crucial for the US economy that investors and retailers keep trust in the US dollar worldwide. But what if this trust has been shaken too much? What effects could this have on the world’s largest cryptocurrency?
Measures often positive for Bitcoin
Central banks play an important role in controlling economic growth and shrinkage. They have a variety of instruments to influence. After the recent volatility and unrest on the financial markets, central banks are particularly attentive. So also the Federal Reserve of the US state of Minneapolis. The President of this central bank, Neel Kashkari, said Recently his concerns about rising interest rates on government bonds.
In his view, this increase could indicate a declining interest of investors. If you turn away, this could mean that your focus will be on other forms of investment. The main task of the central bank is to keep inflation at a level of 2 %. If this value increases, various measures can be taken to slow down the increase. Often these measures also have a positive effect on Bitcoin (BTC) out of.
Possibilities of the central bank and its effects
The increase in bond interest rates occurs particularly in times of fear or uncertainty on the market. The idea behind higher interest rates is to attract more investors. These prefer a higher, defined return when other investments are a higher risk. At the same time, higher interest rates also indicate economic concern. In such situations, investors often use alternative value preservatives, such as Bitcoin.
One of the options of the central bank is to pump additional money into the economy. This can be done by lending or the purchase of government bonds. If enough bonds are bought up, interest rates usually drop again. Historically, such a capital injection was often an additional impulse for Bitcoin. A falling interest rate is to be evaluated positively, but an aggressive purchase of bonds also signals despair compared to the outside world. If the central bank seems to lose control of the economic situation, investors’ trust in the economy and the currency sinks. This can also cause you to switch to alternatives such as Bitcoin.
In the near future, investors and investors will closely observe the central banks. Something has to happen – and every decision brings consequences. If confidence in the economy and the US dollar continues to decrease, capital will flow into alternatives such as gold and Bitcoin. This could cause cryptocurrency to exceed the magical limit of $ 100,000 in the future. We keep our followers up to date – follow us on Instagram.