Recently, the Chairman of the Federal Reserve made relevant speeches on the current economic conditions and monetary policy of the United States. He believes that before the economic crisis slows down, monetary policy adjustments should not be discussed. Regarding this view, some experts pointed out that this is an affirmation of the current loose monetary policy. However, the loose monetary policy may continue for a long time. So, what impact will the Fed’s latest speech have on Bitcoin?
At the beginning of this month, the price of Bitcoin broke through US$60,000 for the first time. Although it has fallen back later, from the current point of view, it is obviously impossible to break through US$50,000, so whether it can break through $60,000 again and stand firm is the key.
The loose monetary policy is very good for Bitcoin. It can significantly boost the cryptocurrency market. If the Federal Reserve continues to implement a loose monetary policy, more funds in the market will most likely flow into the cryptocurrency market, changing the investors’ expectations of cryptocurrency prices, and causing fluctuations in the cryptocurrency market prices. Therefore, the adjustment of macro-monetary policy may affect the cryptocurrency market through the exchange of fiat currency and Bitcoin.
According to industry analysts, the U.S. stock market is currently under a highly bubble state. However, the U.S. government is still planning to launch a trillion-scale stimulus plan, which has caused confusion to many people holding funds, because if the stock price rises again, it will be very dangerous. At the same time, it is also very challenging to find new assets for allocation. If inflation expectations in the US dollar continue to rise, then Bitcoin is very likely to be a token with a truly limited supply and become an asset allocation to hedge against currency risks, and new investors will flood the Bitcoin market in large numbers.
In fact, the long-term trend of Bitcoin has been optimistic by many giants, from MicroStrategy to Tesla, from Goldman Sachs to Citigroup, from Visa to PayPal, the future of Bitcoin is undoubtedly optimistic. Recently, some cryptocurrency analysts stated that Bitcoin may exceed US$80,000 in the future.
However, some research reports pointed out that in the past year, the positive correlation between Bitcoin and the U.S. dollar, gold and the S&P 500 index has been continuously strengthened. In addition, the actual volatility of Bitcoin is too high, making it unsuitable to become a safe-haven asset, but rather, it should be regarded as a risky asset. The report recommends that participants in the cryptocurrency market should not only pay attention to the single market, but also pay attention to the impact of the macro policy adjustments of the monetary authority on the entire cryptocurrency market to adjust the asset structure in a timely and reasonable manner.