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.
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.
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?