Home Litecoin Bitcoin-Pumping Wealth Advisor Licks Chops Over Fed Meeting

Bitcoin-Pumping Wealth Advisor Licks Chops Over Fed Meeting

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The Federal Reserve will maintain its subsequent coverage assembly tomorrow, and analysts predict that the US central financial institution will undertake its second straight rate of interest minimize. That transfer ought to bolster the inventory market, however does it imply something for bitcoin?

Will Interest Rate Cut Ignite Bitcoin Price Boom?

Nigel Green, the founding father of $10 billion wealth advisor deVere, says that the Fed’s ongoing dovish pivot ought to snap the bitcoin value out of its latest stoop and launch it to a brand new yearly excessive.

“Bitcoin, the world’s largest cryptocurrency by market cap, is likely to breakout of its recent sideways trading pattern and be given a healthy boost by the Fed’s rate cut,” Green stated in remarks shared with CCN. “This is as a result of an rate of interest minimize reduces the motivation to maintain the fiat forex. In addition, price cuts usually result in larger inflation, which reduces the buying energy of conventional currencies.

“As such, Bitcoin, and different decentralized cryptocurrencies, change into extra engaging and the value will regulate upwards accordingly,” Green added.

fed interest rate cut probability
Fed Funds Futures suggest a roughly two-thirds likelihood of a 25-basis level rate of interest minimize at this week’s FOMC assembly. | Source: CME FedWatch Tool

If this story sounds acquainted, that’s since you’ve heard it before.

In concept, dovish central banks are bullish for disinflationary belongings like bitcoin. Over time. But that doesn’t essentially imply that BTC will function as a real-time hedge towards particular central financial institution coverage changes.

Just have a look at what occurred two months in the past.

As the July Federal Open Market Committee (FOMC) assembly loomed, crypto buyers waited with bated breath to see how the bitcoin value would reply to the Fed’s rate of interest minimize – the primary within the asset’s lifetime.

This rabid optimism ignored that bitcoin had by no means reacted to the quite a few price hikes the Fed had adopted over the previous decade, and – shock! – the central financial institution’s coverage assembly appeared to have no fundamental impact on BTC’s trajectory.

Will this time actually be completely different?

Geopolitical Risks Could Leave Investors With an Equities Hangover

us-china trade war impact on bitcoin
Nigel Green believes Brexit and the US-China commerce struggle will inject ongoing volatility into inventory markets, diverting some funding to bitcoin. | Source: corlaffra/Shutterstock.

Even discounting his Fed prediction, Green stays wildly bullish on bitcoin, anticipating that the hangover from a cocktail of geopolitical points will persuade buyers to imbibe crypto as a substitute.

The deVere CEO identifies Brexit and the US-China trade war as particular catalysts that would bolster bitcoin whereas muting returns in equities and different markets.

He stated:

“[G]eopolitical issues, such as the U.S.-China trade war and Brexit, are intensifying and investors will increase exposure to decentralized, non-sovereign, secure digital currencies, such as Bitcoin, to shield them from the turmoil taking place in traditional markets.”

As CCN reported, bitcoin hasn’t lived as much as its fame as a macroeconomic hedge, not less than not but. However, it’s potential that’s starting to alter. In late August, the bitcoin value appeared to react in real-time to President Trump’s announcement that he was elevating tariffs on Chinese imports.

Consequently, this prediction from Green has a extra strong basis than his FOMC forecast. But different analysts have differing opinions on the connection between bitcoin and the inventory market.

Tom Lee: Don’t Root for Stocks to Tank

Tom Lee Fundstrat bitcoin cryptocurrency
Tom Lee warns crypto bulls to not root for a inventory market correction. | Source: Bloomberg/YouTube

Like Nigel Green, Wall Street strategist Tom Lee is unashamedly bullish on bitcoin. However, his constructive forecast depends on a vastly completely different argument.

While Green believes inventory market turmoil will ship buyers piling into bitcoin, Lee – the co-founder of Fundstrat Global Advisors – says the dominant cryptocurrency wants equities costs to continue rising earlier than it might probably obtain a brand new all-time excessive of its personal.

Noting that bitcoin’s greatest years have correlated with substantial features within the S&P 500, Lee stated {that a} “decisive breakout in…equity markets” might transform bitcoin right into a “risk-on asset.”

For proof that bitcoin received’t essentially shine in a risk-off surroundings, one want look no deeper into the historical past books than 2018.

Having spent the primary three-fourths of the 12 months grinding decrease, the cryptocurrency market sell-off solely appeared to quicken when equities plunged over the past three months of 2018.

S&P 500 chart

bitcoin price chart
Bitcoin’s parabolic 2019 restoration (backside) didn’t collect steam till nicely after the S&P 500 (high) had recouped most of its late 2018 losses. | Source: Yahoo Finance

Bitcoin’s ensuing restoration didn’t collect steam till nicely after the temper on Wall Street had turned bullish.

Past efficiency isn’t indicative of future outcomes, however it seems that though bitcoin may in the future show to be digital gold, it’s not there but.

Last modified (UTC): September 16, 2019 3:43 PM




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