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FED begins tapering

2 min read

 

Uncertainty on the cryptocurrency market after the intervention of the Federal Reserve through the governor Powell, which reassures the real economy about the transience of inflation in recent months.

All seasoned with the start of the so-called tapering, or a reduction in the purchase volume of public debt securities by the central bank, which if it continues at this rate should end next July. With the conditional which is a must, because Powell himself confirmed that the FED will remain at the window to monitor the progress of the economy.

What did Powell say and why did he reflect on the world of cryptocurrencies?

BTC in conjunction with the announcement of FED had a very strong compression, then quickly recovered in one of the hourly candles most memorable in its history, but then return to a certain weakness in conjunction with the opening of the European markets.

The intervention of Jerome Powell, director of what is in effect there American central bank – which confirmed the start of a program tapering, or a reduction in the purchase of government bonds by the central bank. A maneuver that will gradually reduce the country’s monetary expansion – and therefore should at least reduce the growth ofinflation – for those who embrace Austrian economic theories.

The director also spoke on inflation – reiterating how the European counterparts that it would be a phenomenon transient and ready to re-enter, as it is not structural. This statement also had an effect on the price of BTC and other cryptocurrencies.

Transient inflation? If so, what does it mean for BTC?

The transitional period indicated by the main banks would still take several months – with $ BTC who could continue to take advantage of this situation again. Situation that is not the only one regarding the growth of $ BTC, which is also attributable to other causes.

From the large increase in institutional investments, passing through a reach which is spreading like wildfire, now also involving large groups such as VISA And MasterCard. Who thought they could short the main cryptocurrencies following the declaration of Powell, which among other things was more than widely expected – did not come to terms with an extraordinary strength of the sector, which despite the noise of short period will return to get closer to the targets of short period.

Talk is cheap, move rates less …

If the promises to Tapering have produced some effect on the markets, this cannot be said of the rates, which have instead remained unchanged. Rates that are the true thermometer of the true state of an economy and that suggest that the situation is actually still different than what proposed by Powell.

Rates that could continue to help BTC – should there remain latent uncertainty about the fate of the economic world – still far from returning to normal pre-pandemic conditions.

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