The Federal Reserve has finally cut its interest rate, its first
reduction since the financial crisis. Bitcoin bulls like Anthony Pompliano, could
not be more excited. The rather aggressive Bitcoin investor has predicted a BTC
price of $100,000 in the next two years. Pomp says that the Fed’s lowered
interest rates coupled with the coming 2020 Bitcoin halving are the ingredients
required to get the BTC bulls on the run.
On Twitter, the American entrepreneur and co-founder of Morgan
Creek Digital Assets wrote:
“Bank of America believes the Federal Reserve may have to resort back to quantitative easing as early as Q4 this year. Step 1 was cutting interest rates. Step 2 is printing money. Step 3 will be the Bitcoin halving. You can’t write a better script for the rise of Bitcoin.”
Is This Good For Bitcoin?
The US has been enjoying a strengthened economy, but their president’s war with China has increased recessions risks. This is particularly so in the face of a broader slowing down of economies across Asia, Latin America, and Europe. Add to this turmoil the Brexit situation in the European Union and Jerome Powell, has had no choice but to implement what he called a “mid-cycle adjustment to policy.”
The Fed’s 25 basis points cut and dovish talk is meant to keep the US economy chugging along. The US President Donald Trump has pushed for these cuts to promote the movement of currency that will, in turn, aid US exports. Investors have been waiting for a more aggressive cycle of easing and are largely disappointed by the one-notch cut.
Powell has spooked them further by his suggestion that he would be
approaching the easing more cautiously. There is a lot of pessimism, therefore
that the Fed’s actions could prop the nation’s economy.
The same factors that have precipitated the cut in rates are the same that have fueled the BTC Bull Run. Tom Lee, another Bitcoin bull, says that the digital currency is the perfect hedge against a risky investing environment. A weakened USD and the prospect of inflation have, therefore, profited BTC.
Bitcoin Is More Than a Currency