There’s a growing consensus that central banks across the world are going to opt for policy tightening a lot quicker than markets had previously anticipated. This climate will boost Bitcoin and other cryptocurrencies. How? Read on...
The U.S. Federal Reserve, the Bank of England, the Central Bank of Norway and the Reserve Bank of Australia, amongst others, are all reviewing interest rate policy this week.
The central banks’ signals and moves will be keenly watched by markets as they look for further hints on asset-buying tapering as global inflation ramps up.
The Fed is expected to announce a taper, the Bank of England an interest rate rise, Norway likely to hint at its second rate hike of the year, and the Reserve Bank of Australia could shift its guidance after last week letting its 3-year bond yield surge through the targeted 0.1 percent.
There’s a growing consensus that we’re going to get tightening a lot quicker than markets had previously anticipated.
This climate will boost Bitcoin and other cryptocurrencies as with the provable limited supply cap, they are an intrinsically deflationary asset class.
The mounting concerns over inflation causing Bitcoin to appear more attractive as a hedge also comes as inflows from institutional investors continue to increase - bringing with them capital and expertise - and as providers continue to meet ongoing demand with new Bitcoin-related investment products.
In addition, the U.S. Federal Reserve saying that it has no intention of banning cryptocurrencies is not going unnoticed by both retail and institutional investors.
That said, it’s highly probable that other cryptocurrencies will have more stringent regulatory oversight, yet Bitcoin could be viewed differently by authorities partly due to its gold-like status.
Bitcoin is now undeniably a mainstream asset class, and most investors should, in my opinion, consider including crypto assets as part of a diversified portfolio.
Cryptocurrencies have changed the way the world handles money, does business, makes transactions and manages assets. Investors appreciate the intrinsic value of digital, borderless, global currencies for trade and commerce purposes in increasingly digitalised economies in which businesses operate in more than one jurisdiction.
Crypto investors will be eyeing the central banks this week amid a flurry of interest rate reviews. Prices in the market remain highly volatile, but they can be expected to be positively impacted as Bitcoin and others are increasingly regarded as a hedge against inflationary pressures.
(The author is, CEO & Founder of deVere Group)
(Edited by : Abhishek Jha)