Many factors are contributing to Bitcoin’s renewed trajectory towards its USD 100,000 target. One of them is increasingly gaining prominence: The U.S. Federal Reserve.
Fed Interest Rate Cuts to Weaken Dollar and to Strengthen Bitcoin
The U.S. Federal Reserve’s latest moves might be unintentionally propelling Bitcoin to new 2019 highs with renewed impetus. On Jun 19, 2019, Jerome Powell, the chairman of the Fed announced the decision to maintain the benchmark for the federal funds interest rate within the target range of 2.25% to 2.5%.
However, upon review of the statement, financial experts noticed that The Federal Open Market Committee (FOMC) made several changes to its policy statement. Most relevant, the term “patient” was replaced by a policy language promising to “closely monitor the implications of incoming information for the economic outlook.”
For many, this is a hint that inflation and geopolitical risks are putting pressure on Federal Reserve officials to advance the case for an interest rate cut.
As a result, investors on the trading floors are already betting that the Fed will lower the rates as soon as July, putting the dollar under pressure.
In contrast, investors believe that a Fed rate cut would propel Bitcoin and gold to higher values. For example, according to CNN digital correspondent Paul La Monica,
That has been viewed as a positive for bitcoin as well as gold, which are looked at as alternative currencies that should rally when central banks take actions that reduce the value of government-backed currencies.
Moreover, Central Bankers perspective about Bitcoin might be shifting from a negative to a more positive outlook.
Last week, both Fed Chairman Jerome Powell and his counterpart Bank of England Governor,