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).
