Obviously, Bitcoin reacts very sensitively to events in the world economy, and at the present time the huge uncertainties associated with coronavirus are more evident than ever.
This is also evidenced by a bitcoin price shot of more than 10% after the US Fed cut the interest rate to zero, which means banks don’t have to pay anything to borrow money from the central bank. At the same time, the US central bank announced a $ 700 billion quantitative easing program, adding $ 1.5 trillion to the short-term liquidity it placed on the repo market last week.
This happened only shortly after the European Central Bank announced a similar quantitative easing program and after the Bank of England and the Bank of Canada also lowered their interest rates to protect markets from the potential recession caused by the quarantine for COVID-19.
As we have written above, Bitcoin has responded to the announcement by the Fed with significant growth. Forty minutes after the announcement, it rose from $ 5,150 to $ 5,950, up 15%. The price then quickly returned to approximately $ 5,500, as many investors were liquidating their positions for the sake of further losses.
However, Bitcoin did not sustain its growth at all, and it appears that other coronavirus-related negative reports sent it even lower than it was 24 hours ago. Currently trading around $ 5000, which is 13% less than 24 hours ago.