The federal reserve is printing money and cutting interest rates. Some in government can’t get enough of this.
In theory, moves like this are supposed to boost the Bitcoin value proposition.
Bitcoin (Apparently) Doesn’t Care About Your Inflationary Spending
We’ve seen the opposite over the past several weeks. We’ve witnessed a decline in the overall Bitcoin price plus with no recovery.
Despite an overt expansion of the money supply, inflation hasn’t hit consumers too hard yet.
As such, the federal reserve reportedly wants to increase the money supply even more. The more money in the economy, the more perceived economic activity.
Yet, the dollar’s purchasing power is any economic policy’s real measuring stick. Because things haven’t gotten too bad yet, officials are considering testing the limits a bit further.
Inflation takes time to catch up with macro adjustments, but it can hit with an elastic effect: a small inflationary move can ratchet prices by leaps and bounds. For example, this is happening:
Price for a gallon of gas went up once again. I think Los Angeles, California has the most expensive in the country. Yaaaaa for us. ? Over $3 a gallon where you live? pic.twitter.com/T431h4EVPp
— Trevor Donovan ? (@TrevDon) October 7, 2019
If Bitcoin is the “store of value” that certain parties insist it’s destined to be, then it should be a safe haven during times like these. Which is to say, the price should be going up rather than down, a reality that’s not currently proving out.
Bitcoin’s Sleepy Recovery: A Time For Gathering
Now, there are a lot of reasons for Bitcoin markets to be sleepy in their recovery.
There are humorous takes on this question, such as this half-serious joke from pseudonoymous Crypto Twitter user “Crypto Godfather”:
I firmly believe the reason a new bull run is taking so long is because everyone still in crypto today can’t borrow money from their families anymore after 2017.
— Crypto Godfather (@CryptoGodfatha) October 11, 2019
At time of writing, markets were struggling to maintain a recent minor resurgence.
From a trading perspective, now would be the time to start accumulating cryptocurrency, unless you believed it would go much lower than it already has. Your average cost basis can be around $8250 if you trade in the coming 24-hour period, it would seem, although crypto markets frequently behave differently come the end of a business week.
This, of course, is not trading advice.
View it from a historical standpoint, though. Other times when external economic factors didn’t seem to drive the Bitcoin price, and a lull in markets was prolonged across cryptocurrencies, a breakout eventually took place.
Other macro factors may soon come into play. Democrats have launched a formal impeachment inquiry into US president Donald Trump, for example, and it’s unclear how the economy will respond to the result. If economic or political chaos breaks out, demand for cryptocurrency is likely to soar.
Then there is the upcoming re-appearance of Mark Zuckerberg before congress. Facebook’s foray into cryptocurrency has regulators chomping at the bit, which could in theory also drive Bitcoin and crypto demand.
