The latest Fed policy minutes reveal that ultra-low interest rates are here to stay. The US Federal Reserve has stated that near 0 percent interest rates will be the norm till 2023. Also, the Fed will pursue its 2 percent inflation target whilst also undertaking efforts to shore up employment opportunities for US citizens.
Bitcoin’s price did not immediately respond to the Fed’s latest policy decision. If we take into account the Bitcoin’s recovery from March lows and BTC return during the ultra-low interest rate period, it is well on its way to serve as Noah’s Ark when the next financial downturn strikes. BTC traders are positive that massive US debt and prolonged unemployment trend will only weaken the economy further.
Fed policy has little room for imagination
Jeff Boothhas, a well-known investor and entrepreneur has said that Bitcoin is a ‘must-have’ asset in the portfolio. He says that government policies and central banks will only worsen the debt problem and lead to an economic downturn.
Jeff tweeted that Fed policy aims to resolve the debt problems by piling on more debt. Today, the global debt stands around $250 trillion and the United States leads the pack with a massive $16.7 trillion of debt. The coronavirus pandemic has only worsened the situation further. Jeff warns that unwinding won’t look pretty and nations will have to face a brutal economic blow.
Mass money printing hysteria will only weaken the value of fiat currencies. Debasing national currencies will be the only way to escape the ever-rising debt problem. Safe-haven assets like gold and Bitcoin will emerge as suitable financial alternatives in such a chaotic environment.
Bitcoin price moves up supported by macro picture
Despite facing stiff resistance at $12,000, the Bitcoin price is slowly inching upwards. Selling pressure is evident in hourly charts resulting in mini selloffs and profit-taking. However, the macro picture is looking positive and Bitcoin is sure to break out of its narrow trading range.
Fed policy has only added more weight to the positive Bitcoin fundamentals. The Federal Reserve is fast running out of options to shore up the fledgling economy and a bubbling stock market. Pursuing an unrealistic inflation goal with ultra-low interest rates will only increase the Fed’s problems in the long term.
Conventional wisdom dictates that safe-haven assets like gold and Bitcoin will only emerge stronger amid an uncertain low-interest rate economic scenario.