How Bitcoin (BTC) and Crypto Stands to Benefit from the Fed Rate Increase

[PRIBO247]

A few hours ago, the United States Federal Reserve increased its
interest rate by a quarter of a point from 2.25% to 2.5%. Such an
increase might seem small, but the move is the fourth increase
this year and the ninth since it started normalizing lending rates
in 2015. Central Banks usually increase interest rates to slow
down the economy when there are signs of inflation (which is
defined as a measure of when the buying power of currency
starts to reduce).

IS THE US ECONOMY AT RISK OF INFLATION?
There has been several calls of caution that have been made by
analysts with respect to the US economy experiencing a stock
market crash similar to, or greater than, the one experienced in
2008. One such analyst is J.P Morgan’s top quant, Dr. Marko
Kolanovic, who had earlier on in the year pointed out that the
likelihood of such a crash were low at least till the second half of
2019. He stated that the exact timing of the crash would be
determined by the speed in which the Federal Reserve hikes
interest rates and reverse bond purchases.

CURRENT STOCK MARKET DROP DUE TO THE CURRENT 0.25%
RATE HIKE
eToro’s Senior Market Analyst, Mati Greenspan, explained to
Ethereum World News that the drop in the US markets currently
being experienced was expected given that the increase by the
Federal Reserve had been anticipated. Mati however explained
that this time round, the drop was different.

What really dropped the markets though, was that the Fed
didn’t at all seem sympathetic to the current market turmoil.
They indicate that they’re not about to hike rates
aggressively unless the economy grows quicker.
However, they seemed unwilling to reduce the pace of their
quantitative tightening. Meaning, that they will continue to
reduce the size of their enormous balance sheet, which is
still way overinflated from 10 years of quantitative easing.

HOW BITCOIN (BTC) AND CRYPTO STANDS TO BENEFIT
The increment of interest rates by the Feds indicate that their will
be a domino effect on the US economy. This increase will affect
regular borrowing such as home mortgages and credit cards.
Interest rates for such services will be increased by the
providing financial institutions.
The savvy and cautious investors in the US, will take this as an
early sign of trouble in the economy and start hedging with BTC
and other cryptocurrencies.

Controversial internet guru, Kim Dotcom, had cautioned the world
against its over-reliance on the USD in a tweet that advised on
how to hedge against a market crash using BTC and Gold.

"Trust me. Buy crypto and gold.
Your USD will become worthless. With US economic collapse
all old money currencies will crash. Times will get tough.
But you’ll be fine if you hedge some of your assets in
preparation for the crash. The big crash is coming 100%."

BTC AND CRYPTO MASSIVELY DISCOUNTED 
Further looking at the value of Bitcoin and other
Cryptocurrencies, they are massively discounted when
compared to their All Time High (ATH) values back in December
2018 and January 2019. Many of the digital assets have
experienced a decline in value of between 70% and 92% due to
the current bear market.
Connecting the dots, BTC and crypto might experience a slow
but constant entry of investors who are hedging early against a
possible stock market crash in the United States.

https://ethereumworldnews.com/