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Are central bank policies behind Bitcoin’s latest rise?

Are central bank QE policies helping BTC?

The administration of US President Joe Biden is eager to accelerate his coronavirus relief plan with a third round of stimuli worth $ 1,400 for every US citizen. If the proposed plan is implemented, it will be a $ 1.9 trillion note, in addition to the previous stimulus plans already in play. While these relief checks are in line with the need to reenergize the lagging economy, some reports suggest that they are only delaying the eventual bursting of the Bitcoin bubble.

According to the Financial Times, a series of stimuli from the central bank is currently sustaining Bitcoin’s recovery and fueling its growth.

In fact, Michael Bollinger, Chief Financial Officer of the UBS Wealth Administration, believes that, taking into account the history of bubbles, the current “BTC bubble” could be kept inflated for longer than expected, without collapsing.

It can be inferred from the above perspective that credit is being withdrawn from Bitcoin with this view. What is also curious and interesting is that the digital asset continues to be called a “bubble” by some. Instead of identifying its intrinsic value, terminologies such as “speculative” are regularly used for cryptocurrency.

Now, there is definitely some logic behind the effect of quantitative easing on Bitcoin, but it can be interpreted differently.

a recent report by Ecoinometrics noted that there is more liquidity in the current financial system. This is correct, but it does not mean that this situation benefits only Bitcoin. Other investment opportunities are also picking up pace, but they are off the radar because Bitcoin’s popularity is contagious for its proponents and alarming for its skeptics.

Purchasing power is decreasing; why not Bitcoin?

Comparison of Bitcoin vs Gold vs Stocks since January 2020

The result of the current market is that the Federal Reserve is printing money continuously. This, in turn, has led to a reduction in purchasing power with fiat, which is why everyone is looking at investment windows. Bitcoin has seen strong returns since last year, so more people are taking an interest in it.

In addition, Bitcoin is exploring the effects of its adoption of the S curve, possibly looking at exponential growth in the future.

Before the 2017 bullish cycle, most Bitcoin supporters were technology developers, anarchists and libertarians. Now, the asset class is becoming more retail, with growing institutional interest manifesting itself across the market. Consequently, the Bitcoin bubble may no longer extend. In fact, it is a good possibility that the bubble doesn’t even exist anymore.

Source: AMBCrypto

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