If the fed raises rates to try to wreck Trump's economy before the November midterm elections - Bitcoin is gonna flyyyyyyy
I would expect the opposite: fed rate down = Bitcoin up. Conventionally, low interest rate = more people borrow = more cash to spend (e.g. on Bitcoin) & USD weakens due to supply rise
Go watch The Big Short again - no one went to jail, monetary policy carried on as normal. Same bad lending practices - the result will be the same. Rate hike is the hair trigger.
Okay so there's a financial collapse coming and when it happens, investors will flock to crypto to escape. I mostly agree. Can you explain more how the fed rate rise will trigger it?
Low FED rates = banks use leverage to pump up the stock market. Basically it's as if you bought $5000 of Bitcoin on a credit card and then sent it to Bitmex and 10X leveraged that.
I see... rate hike -> USD money press slows down -> bankers making it rain in the casino/NYSE find their wads of cash are running low -> the party comes to a screeching halt. Nice.
Right, and they're not going to want to be USD bag holders after liquidating either - they'll move into solid assets. Commodities, precious metals, aaaaaaannddd Bitcoin!
Yes commodities always rise during economic turmoil. With crypto emerging as an asset class that's very uncorrelated with conventional markets I can see it being used as a safe haven.
For big wall street investment firms leveraging 100s of billions, to go from 0% interest to 1% is going to seriously eff things up. Any sub-prime loans will go directly to the dumpster
But then your CC company calls you up suddenly and says that instead of a 10% interest rate on your card they're jacking it to 20% - what do you do?? SELL and get off the exchange!
I disagree. There's a massive butt ton of capital tied up in securities that they have no business being in, just like 2008. A rate hike will make investors sell/look for safe-havens.
By contrast, fed rate rise = more people save in USD, fewer loans, keeping USD supply (and therefore inflation) low, less money available to buy crypto with.
In summary, the fed has a lever on USD/BTC (fed rate up = bearish for Bitcoin in USD, fed rate down = bullish for Bitcoin in USD).
There is nothing the FED would like more than to be able to keep the interest low, the FED is not out to get Trump. Interests are kept artificially low, and have been for a long time.
Worded badly, but you know what I mean
Very interestingly though - Bitcoin is the FED's sword of Damocles
I think it's cuz they've always had friendlies in the White House. A very big chunk of the Trump base are Ron/Rand Paul libertarian types. The FED is the Keynesian's sword of Damocles.
Sword of Damocles is an perfect analogy, the FED is also embedded in politics while not being in the process directly they are dependent on the good will (not actual factual results).
Right, they're hanging the sword over the government, but now Bitcoin is a sword is hanging over THEM. We got ourselves a good old fashioned Mexican standoff.
And BLOCKSTREAM is the sword hanging over BITCOIN (BTC), it is Swords all the way down. It is interesting to hear Milton Friedman accept the idea behind the fed but critique the result
