Canada and the European Central Bank have cut interest rates earlier this month, marking the beginning of loose monetary policies for major global economies. Forbes, an American business magazine, mentioned the potential of cryptocurrencies on the 15th, pointing out that central banks around the world have started cutting interest rates. With ample market liquidity released by global central banks, it is expected to support the rise in cryptocurrency prices.
Senior contributor of Forbes, Billy Bambrough, wrote on the 15th that after Bitcoin spot ETF was approved in the United States, Bernstein analysts are optimistic that the market value of Bitcoin will surge from the current $1.3 trillion to $4 trillion by the middle of next year. At the same time, Wall Street is preparing to embrace spot ETFs of cryptocurrencies such as Ethereum and Ripple.
The article mentioned that the Federal Reserve recently quietly admitted that gold is replacing the US dollar, and the International Monetary Fund (IMF) recently released a report warning that the weight of the US dollar in foreign exchange reserves of central banks and governments around the world is significantly decreasing.
A report released by the Federal Reserve Bank of New York on the 3rd indicated that the weight of the US dollar in official reserves is declining, while the weight of gold holdings by central banks in various countries is increasing. However, the report mentioned that this trend is limited to “a few countries”.
Billy Bambrough noted that some commentators disagree with the Federal Reserve Bank of New York’s statement. Balaji Srinivasan, former CTO of Coinbase, pointed out that the “few countries” mentioned by the Federal Reserve represent 3 billion people, meaning that 37.5% of the global population is shifting from the US dollar to gold.
The article mentioned that some commentators are more bullish on the potential of Bitcoin. Billionaire and CEO of Social Capital, Chamath Palihapitiya, predicted that with countries adopting Bitcoin, Bitcoin may “completely replace gold,” pushing its market value to $15.7 trillion, equivalent to gold. Independent presidential candidate for the United States, Robert F. Kennedy Jr., believes that the only way to save the US dollar is through Bitcoin.
Will the rate cut support the frenzy in the currency market? It is noteworthy that the article pointed out that as the US dollar’s position is declining, the Federal Reserve is preparing to start cutting interest rates after a 2-year battle against inflation following the historic COVID-19 pandemic and monetary stimulus measures.
The article quoted an analyst from Bitfinex, stating that central banks around the world have started cutting interest rates, indicating the beginning of a loose currency trend. It seems clear that the Bank of England and the Federal Reserve of the United States will follow suit in cutting interest rates in the coming months. This global liquidity cycle indicates that the money supply is expected to increase, which will support the rise in asset prices, including cryptocurrencies.