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A change in US monetary policies is also unlikely to cause a rapid recovery of Bitcoin

تغییر سیاست‌های پولی آمریکا هم احتمالاً باعث بازیابی سریع بیت کوین نخواهد شد

A change in US monetary policies probably won’t trigger a quick Bitcoin recovery either – Digital Currency

Bitcoin holders are eagerly awaiting the US Federal Reserve’s reversal from current contractionary monetary policies, seeing it as a lifeline for the troubled market of risky assets, such as digital currencies. However, the tipping point being talked about may not bring prices back as quickly as some traders expect.

To Report CoinDesk, the historical data of the S&P500 stock market index, which is considered as a measure to measure the condition of all risky assets around the world, shows that this index in several cases, several months after the beginning of the process of lowering the bank interest rate and the beginning of the cycle of implementation of expansionary monetary policies (little relief) in America, it has reached its bottom.

Expansionary monetary policy is a method in which the central bank increases the supply of money in the market through the purchase of government bonds or other financial products in order to increase the speed of economic growth. Since the money supply increases in this method, inflation increases and the price of goods and services in the country grows. On the other hand, there is a contractionary monetary policy, which affects the economy mainly through the increase of the bank interest rate and the reduction of the balance sheet of the central bank.

Bitcoin also fluctuates more or less according to traders’ sentiments regarding the prevailing conditions on Wall Street. From the beginning of 2022 until now, the Central Bank of America has increased the bank interest rate by a total of 3 percentage points, which has caused the destruction of the market of high-risk assets, including digital currencies.

A change in US monetary policies is also unlikely to cause a rapid recovery of Bitcoin
Comparing the history of the US central bank’s monetary policy turnaround and the S&P500 stock market index reaching its sectional bottom.

Between 1960 and 2007, the American economy has entered recession for 6 times. According to Nick Gerli, the founder of Reventure Consulting, in each of these 6 periods, the fall of the stock market continued after the central bank cut interest rates again (in order to stimulate the economy), and the S&P 500 index averaged It has experienced a 28% drop. The average time for the S&P500 index to reach its bottom after the rotation of the monetary policies of the Central Bank of America is also estimated to be 14 months.

Callum Thomas, director of research and founder of Topdown Charts, also says about this:

Many people are asking what will happen after the Federal Reserve reaches its tipping point. Perhaps the more correct question is that [پس از تغییر سیاست‌های پولی] When will we reach the bottom? In other words, the current situation is different from March 2022 (the date of the first increase in the bank interest rate this year) and more time is needed for a bearish market that is involved in recession to reach its bottom. Apart from this, the economy should literally reach the bottom (end point) of its declines so that the financial markets also reach the bottom.

Thomas added:

Just as it takes time for interest rate hikes to affect the US economy, the turn of monetary policies to expansionary conditions will also take time.

Atlas Aruzdigital

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