If the Federal Reserve decides to implement negative interest rates as many have anticipated, it could prove to be a key pivot point in the story of Bitcoin.
That’s according to a May 14 report by Stack Funds, which states that an era of negative rates could be Bitcoin’s time to shine.
Negative Rates a Pivot Point
The report notes that the threat of negative rates, coupled with the injection of $3.5 trillion newly printed dollars into the economy will cause investors to turn away from traditional markets, stating:
“The uncertainties prevalent in the traditional markets have prompted investors to turn their attention towards alternatives, with a significant one being Bitcoin.”
The report by Stack Funds argues that the concept of holding Bitcoin as a hedge makes sense, in part, due to its apparent decoupling from legacy markets. The report states:
“This interest comes as no surprise given the uncorrelated attributes coupled with the store of value properties that Bitcoin possesses, hence, it is difficult to argue why a fund manager would not consider the digital asset as a hedge to their portfolio.”
The report also references Bitcoin’s status as a store of value – a concept that is not agreed upon by all corners of the cryptocurrency space.
Bitcoin Built for a Recession?
However, one thing that is agreed upon is the deflationary nature of Bitcoin’s inflation rate. The latest block reward halving acts as a reminder that the rate of the production of new Bitcoins is set in stone – and will one day hit zero.
As a growing number of banks in Europe continue to implement negative rates, some have suggested that a ticking time bomb is primed and waiting to explode.
That’s why the decision by the global financial establishment to set negative rates and print more money could be a key pivot point for Bitcoin. The stack report speculates:
“Bitcoin is an asset born from a recession, and will further prove its robustness through a recession.”
Bitcoin was born amid the 2008 financial crisis. Just over ten years on, is it about to take its first steps?