Experts believe Bitcoin will have a good week as US Federal Reserve meets
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The prospect of interest rate cuts in the US — following the European Central Bank’s cut last week — is good news for Bitcoin, cryptocurrency experts reckon.
The US Federal Reserve is meeting over Tuesday and Wednesday to decide whether it will cut rates.
Opinion is divided, with CNN reporting on Sunday that the Fed looks likely to cut rates, but CNBC said on Monday expectations were “suddenly rising” that it might not happen after all.
Nigel Green, CEO of financial advisory firm deVere Group, said he was confident of a rate cut, and said it would be good for Bitcoin prices.
“The Fed looks likely to follow the European Central Bank and cut rates this week by perhaps a quarter of a percentage point,” he said.
“This comes after it slashed interest rates for the first time in a decade in July on US-China trade war tensions.
“Bitcoin, the world’s largest cryptocurrency by market cap, is likely to breakout of its recent sideways trading pattern and be given a healthy boost by the Fed’s rate cut.
“This is because an interest rate cut reduces the incentive to keep the fiat currency. In addition, rate cuts typically lead to higher inflation, which reduces the purchasing power of traditional currencies.
“As such, Bitcoin, and other decentralised cryptocurrencies, become more attractive and the price will adjust upwards accordingly.”
Green last month predicted that Bitcoin could soon approach $US15,000 ($21,944).
Green cited geopolitical issues, technical network improvements, next year’s Bitcoin halving and increased awareness of cryptocurrency — a theme that other experts have attributed to the digital currency’s recovery this year — as catalysts for his sunny outlook.
“Added to these key reasons should also be inflation and governments’ current monetary policies which are driving investors towards Bitcoin and the wider crypto market,” he said.
“We can expect cryptocurrencies, now widely regarded as the future of money, to do well as the global economy slows and central banks ease monetary policies in response to this.”