Bitcoin (BTC) Provides a Safe Haven for European investors after ECB Interest Rate Cuts
The world is shaping up to one of the biggest financial revolutions in history as digital assets continue to take shape as the future form of currency. Bitcoin (BTC), is currently the top cryptocurrency and heavily dominates the industry’s conversations. Bitcoin has long been touted as “digital gold”, “global currency”, “dollar killer” etc. with more adjectives and nicknames coming up on the daily. The attention the king of crypto is receiving is fully deserved given the value of the platform and freedom that the coin is offering its holders.
ECB Plans to Cut Interest Rates, Bitcoiners Rejoice
Earlier in the week, Mario Draghi, the European Central Bank president had announced that the bank will be cutting its rates and buy bonds in the coming future in a bid to avoid a global economic meltdown and boost inflation rates in the Eurozone area. Europe is currently experiencing below-expected levels of growth following Germany’s growth downturn, political pressures between Germany and Italy, and pressures from the Brexit decision.
Draghi claims the bank is protecting the area from the persistent global trade risks with the rate cuts and the planned second round of quantitative easing this autumn. The rate cuts and buying bonds is a monetary expansion move from the ECB that increases the number of Euros circulating in the continent. This discourages investors from saving while inflation reduces the value of their saved cash. Interestingly, the ECB’s (and any central bank’s) biggest threat, BTC, offers investors and savers a better option than euros.
The rate cuts coincide with Bitcoin’s year long wait for the halving in May 2020, a process that will reduce the rewards for mining a block from 12.5 BTC to 6.25 BTC per block, effectively reducing the supply. This in turn is expected to increase the value of BTC. One of the well-known cryptocurrency analysts and Morgan Greek founder, Anthony Pompliano, believes the timing is right for Bitcoin to boost past its previous highs owing to the ECB’s interest rate cuts.
He writes on Twitter,
“European Central Bank President Mario Draghi just I hinted at new interest rate cuts and more QE. Add in the May 2020 Bitcoin halving and you have the perfect storm. Cut rates. Print money. Make BTC more scarce. Long Bitcoin, Short the Bankers! 🔥”
With most central banks moving towards rate cuts, printing money and QE measures to boost economic growth people are moving their assets to alternative investments. With the halving coming up, investors are urged by Anthony to move from the banks to BTC as digital assets become more attractive to people.
BTC is a Diversification Asset for Global Pressures
Comparative to cash, bonds and equities, BTC offers a new class of investment that in spite of being risky offers the holder high returns. The coin is totally disfranchised from the global markets which offers a hedge for investors and its limited supply also assures users of future growth. The recent monetary policies by the ECB to increase economic growth may push more investors towards purchasing BTC.
Furthermore global tensions in the world today – US/China trade talks, massacres in Sudan, Yemen humanitarian crisis and US-Iran tensions – may see the trust of people in fiat currencies fall. This will increase the demand for bitcoin across the globe.