- Bitcoin and other cryptocurrencies could face a downfall if the Federal Reserve does not adjust its policy.
The founder and former CEO of the cryptocurrency exchange BitMex, Arthur Hayes has cautioned that if the Federal Reserve does not adjust its monetary policy Bitcoin and the market for digital assets may see a possible decline.
In a blog post published on January 19, Hayes specifically warned that the scenario might happen if Bitcoin’s recent advance has been sparked by the market anticipating a Fed resumption of money printing.
Hayes said, “Bitcoin will probably tumble back down towards prior lows if the Fed does not follow through with a pivot or if many Fed governors play down any prospect of a pivot even after a strong Consumer Price Index (CPI) “. He further cautioned that if such an event takes place, the impacts may spread to other risky assets while forecasting that pivoting will probably strengthen Bitcoin.
Hayes also stated that bonds, stocks, and every type of cryptocurrency under the sun all get burnt as the support structure for the USD- based global financial system breaks down. If the Fed does execute a pivot, Bitcoin will maintain its impressive performance and this surge will mark the beginning of a secular bull market.
Even though he issued the warning, Hayes said he still expects the Fed to subsequently move to print money and avert another financial disaster. The founder of BitMex highlighted that if this were the case, it would signal the local bottom for risky assets like bitcoin.
It is crucial to remember that traders and investors regularly monitor the Federal Reserve’s monetary policy since any shift in that policy might have a big effect on the markets. Notably, the Fed will probably lower interest rates due to the slowing in the CPI.
After weeks of consolidation below $17000, Bitcoin has recently recovered and reclaimed the $23000 mark. A decline in the U.S. CPI numbers which hinted at a potential slowdown in interest rate increases sparked the rally.
The latest advances according to Hayes may thus be a part of Bitcoin’s recovery from its lows but he warned investors to be prepared for a new plateau and sideways trading until the liquidity conditions for the US dollar improve. Indeed, the impact of the FTX crypto exchange failure which resulted in the first digital asset test falling below $15000 has been ignored by the present bitcoin surge.
In summation, despite the fact that an American Entrepreneur has expressed concern about the future of bitcoin, it is crucial to remember that this is only one point of view and that some experts think the cryptocurrency still has a promising future but its important to take into account how the Fed’s monetary policy might affect bitcoin and other cryptocurrencies. Before making any investments investors should always conduct their own research and speak with financial experts.
Source: https://www.thecoinrepublic.com/2023/01/23/bitcoins-future-in-flames-entrepreneur-sounds-the-alarm-on-feds-monetary-policy-impact/