Some of the recent economic situations around the world are proving to be beneficial for Bitcoin. Prominent among these phenomena is the announcement by the chairman of US Federal Reserve, Jerome Powell, who indicated on June 19 that Fed would be maintaining interest rate in the target range of 2.25-2.5%. The revelation has come as a shot in the arm of Bitcoin with the largest cryptocurrency by market capitalization surging past the mark of $11,000.
Just a day ago, Bitcoin was valued just above $10,000 and within 24 hours, it registered impressive gains of around $1,000. Also, read more on future predictions for Bitcoin on our forecast page.
Industry experts have carefully analyzed the statement issued by the Federal Open Market Committee (FOMC) and inferred that there had been a significant shift in the policy by the Federal Reserve. These changes can positively influence the fortunes of other financial assets including cryptocurrency and gold as the weakening position of the dollar will shift the investors towards these alternative assets of investment. The subtle shift in the policy is highlighted by the replacement of the word “patient” in the statement by the promise to have a “close monitoring” of the information related to the Economic Outlook. Crypto analysts are reading positive signals and anticipating that the US Fed will come up with interest rate cut soon to spur the economy reeling under the impact of a variety of geopolitical and economic circumstances. Some of the investors are even betting that interest rate cut will happen in the next month of July and if that happens, the dollar will definitely come under the pressure. The decrease in the value of the dollar will then present a golden opportunity for other assets to enhance their valuation and attractiveness for the investors.
Take, for example, the opinion expressed by Paul La Monica (working in the capacity of digital correspondent at CNN) who thinks that once the government support decreases for the fiat currencies (Dollar in this case), the alternative assets such as crypto and gold will definitely gain in value.
Another perspective which is also fueling the growth of Bitcoin is the change in the stance of government towards the digital coins. Over the last few months, many central banks across the globe have taken a positive viewpoint on the cryptocurrency and it can be safely concluded that there is now a positive shift in the opinion of the regulators. For instance, just a week ago the chairman of the Federal Reserve of US, Jerome Powell and governor of Bank of England, Mark Carney, advised the regulatory authorities at the Central Banks to have a positive outlook towards cryptocurrencies. According to reports, both chiefs asked the Central Banks to analyze the prospects of cryptocurrencies with an open mind. Going one step further, Carney said that he is in favor of imposing strict controls on the cryptocurrencies and all the digital coins must conform to the highest level of scrutiny and regulations.
The strict and stringent regulations will have a positive impact on the adoption of cryptocurrency, says La Monica who sees this statement in a good light. The whole cryptocurrency market will be benefited from the strict controls as it will help to smooth the high volatility prevailing among the digital coins. Less volatility in the valuation of Bitcoin means its legitimacy among the investors and more importantly, among the general public will enhance, leading to wide adoption of digital coins around the world.
Some of the other factors that have also lead to an increase in the Bitcoin valuation along with pushing the value of gold up are uncertainty related to Brexit, widespread demonstrations in Hong Kong, and rising tensions in the Middle East. As a result, gold has reached its highest value in the five years with its value hovering around 1,400 pound. Bitcoin, on the other hand, has surpassed the level of $11,000 and looking to consolidate its position further.