Market

Bitcoin and other cryptocurrency prices are facing further headwinds from central banks

The price of Bitcoin and other cryptocurrencies could face headwinds from central banks in the coming months as banks around the world again prepare to tighten monetary policy further amid the pandemic.

Bitcoin and other electricity prices are facing further headwinds from central banks

Bitcoin and other crypto prices are facing another headwind from central banks – interest rate hikes

As the first central bank in a western industrialized country after the pandemic, the Norwegian central bank, Norges Bank, raised interest rates from 0% to 0% this week, normalizing policy rates when the economy “normalizes”.

“The reopening of society has given the Norwegian economy a significant boost and activity is now above pre-pandemic levels.” Norges Bank continued to explain the rate hike. It added that the rate will most likely continue to increase in December. ”

And while Norway’s rate hikes may not be significant on their own, central banks tend to stick together on interest rate policy, as Nik Bhatia, Bitcoin proponent and author of Layered Money, pointed out:

Aiming to pave the way for tighter monetary policy, the Bank of England (BoE) warned on Thursday, while keeping interest rates unchanged, that “global inflationary pressures will remain strong”. It is also pointed out that “the cost pressure may be more persistent” than previously assumed.

Similarly, the US Federal Reserve (Fed) decided this week to keep rates unchanged despite stating in its statement that “inflation is picking up” and “is on track to outperform”. 2% on average for a while ”

It can thus be clearly seen that the coronavirus epidemic has led to an increase in inflation in many countries. And before such a financial crisis, banks left interest rates unchanged. Many predict that while inflation appears to be in favor of BTC and many other cryptocurrencies, it won’t happen if banks decide to tighten monetary policy by raising interest rates.

The reason why the price of Bitcoin and other cryptocurrencies is subject to turbulence from the central banks’ interest rate hikes

In comments to reporters, Fed chairman Jerome Powell said the cuts – which would mean a $ 120 billion reduction in the central bank’s monthly bond purchases to prop up financial markets – could begin as early as the next Fed meeting in early November, assuming , the job market remains “pretty strong.”

Given soaring inflation and worsening labor market conditions, some analysts see the market almost relieved as the Fed moves towards rate cuts and rate hikes.

“The US economy no longer needs a large amount of liquidity“Paul Donovan, chief economist for UBS Group AG Wealth Management, told Bloomberg on Thursday that there was almost a sense of relief.

And while high inflation is often believed to be good for Bitcoin, rising interest rates are seen as a headwind for hard assets like Bitcoin and gold as they make bank deposits more attractive.

It should be noted, however, that real interest rates – d in the negative range.

However, looking back at recent Bitcoin price movements, even discussions about possible rate hikes, especially in the US, have resulted in losses for the number one cryptocurrency, with central bank meetings in April and June leading to a sell-off of $ 2. led% to 5%

Looking ahead, after the US decision to keep rates unchanged, Bitcoin responded with higher trading for the next two days until a China-triggered sell-off took place on Friday.

Join our Facebook group and Telegram group Coincu News to chat with more than 10,000 other people and share information about the crypto currency market.

Important NOTE: All content on the website is for informational purposes only and does not constitute investment advice. Your money, the choice is yours.

Annie

Championing positive change through finance, I've dedicated over eight years to sustainability and environmental journalism. My passion lies in uncovering companies that make a real difference in the world and guiding investors towards them. My expertise lies in navigating the world of sustainable investing, analyzing ESG (Environmental, Social, and Governance) criteria, and exploring the exciting field of impact investing. "Invest in a better future," I often say. That's the driving force behind my work at Coincu – to empower readers with knowledge and insights to make investment decisions that create a positive impact.

Recent Posts

Best New Meme Coins to Join for 2025: BTFD Coin Leads, Popcat Keeps It Purr-fect, and Non-Playable Coin Hits Gamers Hard

Discover the Best New Meme Coins to Join for 2025. BTFD Coin's price rollback offers…

57 minutes ago

Solana memecoins crash while DTX Exchange hits 100,000 TPS on layer-1 blockchain

Discover how DTX Exchange's historic achievement of 100,000 transactions per second on a layer-1 blockchain…

2 hours ago

Strategic Bitcoin Reserve Expected to Cut 35% of US National Debt by 2049

VanEck suggests the U.S. could reduce its national debt by 35% by 2050 through a…

2 hours ago

The New Lead of Presidential Crypto Council Appointed by Trump Is Bo Hines

President-elect Donald Trump named Bo Hines as the executive director of the presidential crypto council.

2 hours ago

Best New Meme Coins with 1000X Potential: BTFD Coin’s Hot BIG50 Discount As Baby Doge Coin, Dogs Takes Gaming to the Next Level

Explore the best new meme coins with 1000X potential. Learn how BTFD Coin leads with…

3 hours ago

BlockDAG Surges Past $170M as BDAG250 Bonus End Countdown Begins – Aave Targets $400 & Solana Shines with Scalability

BlockDAG crosses $170.5M in presale success with BDAG250 bonus and Whitepaper V3 launch! Solana grows…

5 hours ago

This website uses cookies.