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Infusion of Liquidity by US Federal Reserve: Impact on Value of Bitcoin and Gold

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The devastating impact of coronavirus is glaringly obvious not only the social fabric but also on the global economic system. The highly contagious disease has brought the world to its knees and governments and federal institutions are leaving no stone unturned to support their economies to avoid global meltdown kind of a situation that the world witnessed in 2008.

US Federal Reserve Announcement

Central banks of the various countries are coming forward with economic packages and one of the most important announcements has come from the US Federal Reserve, which is now gearing to swamp the market with liquidity. While this declaration might have come as a reprieve for many disgruntled companies and employees, the stock market has a different take on the news.

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Given the fact that more printing of the money will ultimately devalue its position in the market, the dynamics of the stock market have changed on the backdrop of the Fed’s announcement. More specifically, the gold and cryptocurrency have shown positive trends with their value climbing the ladder just after the announcement of having “Infinite Liquidity” has been made. The resurgence in the prices of the gold has been led by the speculation that the situation today has become, more or less, akin to the 2008 Global financial crisis and the infusion of fresh liquidity into the market will ultimately have a positive impact on the prices of gold as well as Bitcoin.

Technical Analysis

Word has it that the US Federal Reserve is going to start a massive buyback process, which will turn out to be a positive for the owners of the gold and crypto holders. During this buyback process, the Federal Reserve is estimated to be spending around $2.5 trillion/month, which is a massive exercise by any standards of comparison.

What has also stimulated Bitcoin holders is the fact that this particular announcement of increasing the liquid into the market has just come before the event of Bitcoin halving that is expected to take place sometime in the month of May. The efforts of the Federal Reserve to provide finish liquidity are going to have a negative impact on its credibility and there are chances that Dollar might be heading towards the economic crisis the world has witnessed in Zimbabwe.

Bitcoin halving is going to constrain the supply of a cryptocurrency in the market as rewards are going to be reduced from the current level of 12.5 BTC to 6.25 BTC. This, coupled with the announcement of liquidity injection, is expected to have a positive impact on the valuation of Bitcoin. Currently, Bitcoin is trading at $6,648, and experts are anticipating that the BTC Price can go well beyond $7,000. This is quite a good opportunity that many investors are utilizing by investing in automated Bitcoin trading platforms such as Bitcoin Circuit Review. You can also invest in the Gold, which is currently trading at around $1,598, and like Bitcoin, the value of this precious metal is also expected to gain fresh momentum.

Conclusion

Some of the coming few weeks are going to be crucial from the perspective of Bitcoin and gold valuation. The near future will also crucially decide whether we will head towards another global meltdown or world economies will be able to recover from the disastrous impact of coronavirus. Investors and financial analysts are waiting with bated breath how the impact of the recent announcement of the Federal Reserve and the overall pandemic situation on the coronavirus will ultimately play out in stock markets across the globe.

Scott Cook

Scott Cook got into crypto world since 2010. He has worked as a news writer for three years in some of the foremost publications. He recently joined our team as a crypto news writer. He regularly contributes latest happenings of crypto industry. In addition to that, he is very good at technical analysis.

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