Ripple CEO: Fed Decision Regarding Interest Rates to Direct Focus to Crypto
The Federal Reserve Chairman Jerome Powell made a shocking announcement during yesterday’s widely watched speech, in which he noted that the Fed will be allowing inflation to start running past 2%. This had far-reaching implications, influencing the price of assets like gold, crypto, and equities.
Although high inflation is overtly positive for Bitcoin in the near-term, investors faded the move, with the crypto rallying as high as $11,600 before losing its momentum and plunging down to lows of $11,150.
This decline was fleeting, as bulls have since erased virtually all of the losses that came about as a result of this movement.
Despite the inflation news not having any positive short-term impacts on Bitcoin, the CEO of FinTech company Ripple believes that it will help direct heightened focus to crypto going forward – providing the entire market with a significant boost.
Fed Decides to Let Interest Rates Run Hot
The massive money printing that has been undertaken by the U.S. government was bound to lead to heightened inflation.
As NewsBTC reported yesterday, during Powell’s speech yesterday, he explained that the Fed would be taking unprecedented actions to allow inflation to surmount 2% in the coming years.
This is being done to help support the economy, as it will allow for heightened money printing in the form of direct stimulus, bond repos, and quantitative easing.
Naturally, the benchmark crypto’s absolute scarcity makes it the obvious alternative to the US Dollar as a store of value, as the fiat currency will now degrade in value on an annual basis at a pace higher than ever seen before.
Investors looking to preserve their capital will now need to find assets that have scarcity and can appreciate at a rate higher than the 2%+ inflation.
Ripple CEO: Crypto to Receive Boost Due to Ongoing Inflation
He notes explicitly that the nascent asset class will be boosted by global investors looking to diversify their portfolios to avoid unnecessary exposure to USD.
“The pandemic is throwing so many playbooks out the window… yesterday’s action flies in the face of decades of precedent. Signs point to further dollar debasement in the near term (leading to further diversification of assets which will certainly be good for crypto).”
It is crucial to keep in mind that these benefits are all long-term and that the implications of the Fed’s decision will likely have a muted short-term impact on the crypto market.
Featured image from Unsplash.