Home
News
- Bitcoin may be seeing prominent gains as the U.S. Federal Reserve has made rate cuts to bolster the economy under the coronavirus outbreak.
- Bitcoin is expected to see a rise in value as the rate cuts have taken place due to multiple linked events.
- The entire financial economy is taking strong hits under the news of the coronavirus outbreak with most markets experiencing severe losses.
The largest cryptocurrency by market cap, Bitcoin, maybe seeing prominent gains as the U.S. Federal Reserve has made rate cuts to bolster the economy under the coronavirus outbreak.
The interest rates were severed half a percentage point, a move never seen before since the 2008 rate cut, in order to jumpstart the financial economy’s current declining state.
Bitcoin is expected to see a rise in value as the rate cuts have taken place due to multiple linked events. The interest rate cut means that there will be more currency being printed in order to combat the debt being accumulated.
This newly printed fiat will eventually get invested into different forms of assets to store value, like stocks, real estate, and cryptocurrencies.
The markets will begin front running, a process where individuals enter trades where they possess non-public knowledge of a large transaction to be processed that will moonshot the price of the asset traded. As the markets begin investing heavily in cryptocurrencies like Bitcoin, thus increasing in value.
This behavior can already be seen with Bitcoin as the cryptocurrency has increased value from its lows of $8,300 in the past week to a current value of $8,775 as of press time. Bitcoin’s strong movements due to this new rate cut mean that the world’s most famous cryptocurrency is further solidifying its role as a good store of value.
The interest rate slashing from the Fed comes as a surprise, being the first emergency unscheduled cut since the 2008 financial crises. The current interest rates sit in the range of 1-1.25%.
The entire financial economy is taking strong hits under the news of the coronavirus outbreak with most markets experiencing severe losses. The virus was first observed back in December 2019 but didn’t gain much media attention up until late January 2020, due to expectations that it was controlled.
But by the first week of February, news spread that there was a virus outbreak that had a strong mortality rate with no cure, and China was heavily impacted by it, having been the zero ground for the virus.
Emergency measures taken in China to control and contain the outbreak led to a huge impact on the global economy as a whole since most manufacturing processes are run in China, along with many other businesses that make up the global infrastructure.
This resulted in stock markets, derivatives, cryptocurrencies, and other assets all going down in value under the stress of the outbreak. The Federal Reserve’s move highlights that the outbreak is having an impact on the strongest economy in the world too.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
