Equity markets have been surging following the US Federal Reserve’s (Fed) announcement of an emergency rate cut to counter the economic disruption of the coronavirus.
The bitcoin price which had also been experiencing a recent bearish decline, also reacted to the news of a rate cut of half a percentage point from the Fed, with a sudden spike from $8400 to $8950.
The reaction of the bitcoin market to the first cut to key rates from the Federal Reserve since December 2008, during the global financial crisis, is being carefully observed by the crypto community and may eventually reveal the cryptocurrency’s true nature.
Bitcoin and Commodities
Is bitcoin a currency designed to facilitate commerce, or is it a commodity that has intrinsic value, which rises and falls according to supply and demand? This is a question that the crypto community has been asking for some time and the Federal Reserve's rate cut could provide the answer.
By cutting rates the Federal Reserve will increase the supply of money in the global market, a welcomed move by businesses everywhere. The half a percentage rate cut effectively devalues the US dollar, the de facto global currency, thus it should put up the price of commodities such as gold as the supply of gold did not increase. This should in theory also apply to bitcoin as its supply is also fixed.
Full article on [url]https://blockchain.news/analysis/bitcoin-safe-haven-status-under-fire-following-us-federal-reserve-rate-cuts-to-combat-coronavirus-disruption[/url]
From [url]https://blockchain.news/[/url]