The notion of the Fed printing billions in US dollars as a way to try and prop up the economy even before the Covid-19 panic was a topic of contention. This process is one way to encourage spending but can also lead to inflation and other damaging factors on the economy.
The Covid-19 outbreak, however, has led to huge ramifications for the US economy and has led to the Fed admitting there is almost no barrier to the amount of money printing it is willing to do.
Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said on CBS’s “60 Minutes” that “there is an infinite amount of cash in the Federal Reserve. We will do whatever we need to do to make sure there’s enough cash in the banking system.”
For those who are not so aligned with the Fed’s policies, such as Bitcoiners, this seems to have been a catalyst for the coin to once again start climbing in price against the wave of other assets which are still dropping and feeling the current market crisis pinch.
Bitcoin is heading back towards $7,000 after briefly topping that figure in a remarkable 90 percent gain last week. Some have put this recent rally down to the fact that the US economy is under huge strain and that the answer to alleviating this is to devalue the worth of the world’s most powerful currency.
Gold reacts in a similar way
If Bitcoin is indeed reacting to the Fed’s decision to print infinite cash, then the coin may well be back on the road to being considered a hedge against financial uncertainty. Many believed Bitocin could be the saviour in an economic crisis, but it failed to shine as the markets collapsed.
Now, however, there is every chance that the Bitcoin market has stabilized enough to once again work in negative correlation to traditional markets. This is being seen with the price of Gold. Gold is again rallying in the face of the Fed’s decision as it often does when there is any movement that is made to devalue the dollar.
Bitcoin to get back to winning ways?
Bitcoin currently sits just $1,000 away from its price before the big collapse on March 11. The coin was trading at $7,700, having fallen twice before on news of building financial uncertainty. However, it has rallied back towards $6,700 from its lows that were less than 10 days ago.
Bitcoin looks like it could be rallying once again to try and make up the recently lost gain, however, it would be worth taking this into consideration and being cautious. Bitcoin is still a volatile asset, both downwards and upwards, thus any gains could again be wiped out with ease.