on the crypto
Another huge Quantitative Easing (QE) program is expected to favor bitcoin, both in terms of reputation as a hedge against centralized changes in the financial system, and also directly, as asset prices gradually rise across the board.
The action of QE
While QE can be considered an anathema for cryptocurrencies, some experts agree that the net effect on prices is positive in one way or another. QE has helped raise the price of bitcoin (BTC) in the past ten years, according to economist and author Frances Coppola.
"What QE does is raise asset prices across the board and that would include new alternative resources like bitcoin," he said. The idea that bitcoin is related to the financial mainstream is now unquestionably confirmed, added Coppola (Lo Coronavirus shock this month saw bitcoin lose nearly 50% of its value).
Have there been other QEs?
Central banks conducted three QE cycles between 2009 and 2015, during which the S & P500 rallied over 200%. Gold, a classic safe haven asset, rose from $ 800 to $ 1,921 in the three years leading up to 2011, before returning to quota $ 1,050 by December 2015.
Since the last financial slump in 2008, QE has helped global private wealth grow by two thirds to $ 166 trillion, according to the Boston Consulting Group, however, the idea that spending money in developed economies leads to hyperinflation - a popular idea among some bitcoin advocates - it's false, Coppola said.
“There is absolutely no evidence that QE causes hyperinflation. The way QE works is to push investors towards higher yielding assets - and bitcoin, while being incredibly volatile, has higher returns. So what you actually get are asset bubbles, including bitcoin, "he said.
Hypothesis: how cryptocurrencies will react
To counter the ongoing coronavirus pandemic, the Federal Reserve has announced a program that includes the purchase of bonds worth $ 700 billion and a reduction in interest on deposits of between 0,0 and 0,25%.
Simon Peters, market analyst at eToro, has agreed that once the increase in COVID-19 cases outside of China begins to decrease, investors will look towards assets such as bitcoin.
“Having cash is not beneficial in these circumstances because the currency has been devalued and purchasing power is lost. So where do you invest? This is potentially the time when anyone who can afford to invest in bitcoin or other crypto assets can actually see the advantage. "
Meanwhile, we are thinking of cutting rates
Meanwhile, there are several factors that could already require a revision of interest rates by the FED in the coming months. The whole thing is to be traced back, like anything in this period, to the coronavirus pandemic. This could once again cool relations between the US and China, once again calling into question the fate of the entire world economy, as we are already witnessing in recent weeks.