As Bitcoin climbs above $ 11 thousand with the weakening of the dollar, one eye of the market is in the FED. The American central bank will announce the interest rate decision tomorrow. The expectations are that the pigeon attitude will be strengthened and maintained.
It is seen as a sign of a bull run for Bitcoin to exceed $ 11,000 for the first time in about 11 months.
Bitcoin would touch almost $ 11,500 last night, but later there was a retreat. Under this correction may be the investors waiting for the decision of whether the Federal Reserve will continue to support the FED’s support package, ie money pumping policies.
The Federal Open Market Committee generally convenes on Tuesday and Wednesday to discuss policy measures. With the latest situation in the Kovid-19 figures, the committee is expected to discuss how this could threaten the recovery of the economy in the coming months.
It is predicted that the FED will continue by strengthening the pigeon attitude that has been going on for a while. Six weeks have passed since the last meeting. In these six weeks, new cases emerged at record levels aside from the outbreak and recovery. When the FED last gathered at the beginning of June, there was a certain stability in the outbreak and decreases were observed in the number of daily cases in some states. As such, the FED drew a pessimistic picture in the economic outlook. Therefore, it is estimated that the pigeon attitude will be further strengthened at the meeting that started today and the announcement will be made tomorrow.
It is stated that the rally in Bitcoin came with the weakening of the dollar. The US dollar index rose 0.2 percent before the FED meeting, but remains trading near the two-year low.
Investors turned to risky assets
Looking at interest rates, the decision to keep rates low can directly affect leading US Treasury bills. Any positive policy can put downward pressure on real returns. As you may remember, last week interest rates fell below zero, and investors turned to more risky assets for better returns.
It worked for Gold and Bitcoin
This led to gold reaching an all-time figure earlier this week. On the other hand, Bitcoin broke the resistance that restricted its upward momentum for 1 year.
“Waiting for Autumn”
Lou Crandall, Wrightson ICAP chief economist in New York, predicts that the FED will not change interest rates. Crandall stated that the central bank still continues its measurements regarding Kovid-19:
“We will not ignore the tendency that the FED will continue its policy of printing money after completing its work in the fall.”
“Gold also triggers Bitcoin”
“This will create more space for Bitcoin to grow,” said Thomas Costerg, senior economist at Pictet Asset Management, adding that the FED’s inclination to keep his finger on alert will increase demand for secure port assets such as gold.