Not too long ago, it was reported and indeed seen that the digital market and its ultimate commodity; bitcoin, experienced heavy selling after it was heard that the United States Federal Reserves is taking emergency steps in order to reduce or lessen the effect of the current economic wreckage that has thrown the whole world in shambles.
The country’s central bank has reportedly being cutting interest rates to between 0-2.5%. This is undauntedly the lowest band to fall back on before stepping into the negative. Reserve requirements for Commercial banks have been reduced to nothing, and the Quantitative Easing program has been brought back to fuel the crashing system with liquidity.
The emergency rate, which has been reduced to zero and $700 billion in Quantitative Easing is the biggest financial bet the U. S Reserves can utilise right now. If they don’t succeed with this, there is barely an option left to follow.
Cryptocurrency facing huge Sell-off
In reality, the drastic measures just like the ones sort to be used by the Feds is really over the board for an asset like bitcoin with restricted supply. However, we can see the situation clearly playing out, the reverse is the case, and bitcoin, and even the broader cryptocurrency market is currently selling off along with the stock market. Sadly, conventional gold is being sold in the same track, and all efforts made by the central bank to contain the situation has proved abortive.
Market actions presently taken are being considered among members of the community, and there are questions and doubts as to whether bitcoin can be considered an uncorrelated asset. This question has also being posed by an economist and trader, Alex Krager. He pointed out that really paying attention to what conventional assets and central banks do brings the whole thing of cryptocurrency in a different light altogether.
On the other hand, the deliberation on what can be expected from governments and central banks next revolved primarily around what should be done to prevent a full economic meltdown, and what the repercussions might be.
What should we expect?
Despite the recent bitcoin disaster, many leading members of the community stayed quite postive about bitcoin’s potential during these uncertain and unstable economic times. Even the co-founder of Morgan Creek Digital, Anthony Pompliano, went so far as to calling The Federal Reserves’ measures “a USD 700 billion marketing campaign for Bitcoin.”
Nonetheless, not everybody is confident that immense government incentives will promptly benefit bitcoin. These includes some members of the community and certain bitcoin bigwigs such as Tushar Jain, managing partner at crypto investment fund Multicoin Capital. They are of the opinion that it won’t be of any help to the bitcoin saga.