The US Federal Reserve has no plans to limit stimulus measures due to the coronavirus pandemic. Analysts believe that such a policy could be a strong argument in favor of Bitcoin. The Fed announced that it will continue to inject at least $ 80 billion into the economy every month and keep interest rates near zero until unemployment falls and inflation hits 2% again. It is predicted that it could take years.
Denis Vinokurov, head of research at digital asset broker Bequant, believes that a weak US dollar, combined with an appetite for risk, usually creates problems in the forex markets, as it leads to a hunt for profits and an influx into emerging markets:
“This is a bad sign. This creates problems for local central banks due to the risks of higher inflation. But this is good for Bitcoin, which has become a hedge against the unexpected, as well as against inflation. "
People from developing countries, where central banks have eroded confidence in local currencies, are more likely to switch to bitcoin, he said.
Dalpha Capital CEO Matthew Edwards said:
“While the argument that bitcoin as a store of value and a hedge against inflation has already attracted billionaire investors like Paul Tudor Jones, this conclusion remains purely theoretical for now as inflation remains stagnant and BTC has yet to be tested in an inflationary environment. ".
More important, Edwards said, is the fact that consistently low interest rates, as well as declining returns on traditional investments, can increase investor risk appetite. And bitcoin is the most risky asset of all.
EToro US manager Guy Hirsch believes that all of this could fuel retail interest in Bitcoin and other digital assets:
“People are beginning to realize that the value of their money is diminishing because they are not making a profit. Then they start looking for alternatives in order to maintain their purchasing power and wealth. The tremendous growth potential that Bitcoin offers, as well as the opportunity to generate income from it, are extremely attractive to many people and similar prospects will continue for the foreseeable future. "
Market analysts conclude that the entire current situation represents the best advertisement for Bitcoin.