Brian Armstrong, the CEO of leading US-based cryptocurrency exchange, Coinbase, believes that the current drop in the global markets and the latest cut in the interest rates might be a turning point for the industry as it could lead to a crypto surge this year.
Using Crypto As A Reserve Currency
According to Armstrong, governments around the world are continuously looking for ways to stimulate the failing economy, including using “quantitative easing” and printing more money, just like China did.
With the Coronavirus having China as its place of origin, the Chinese Central Bank had to pump $173B into the economy to keep it afloat as the country combats the epidemic, even though excessive money printing is a recipe for inflation.
The Coinbase CEO believes that investors looking to safeguard their wealth against inflation might move their funds into cryptocurrencies as a hedge.
“This could be the year where the mindset of institutional investors begins to shift, from crypto as a venture bet, to crypto as a reserve currency,” he said.
Stock Markets Continue To Plunge
Perhaps cryptocurrencies tend to shine when the global economy is falling, and right now, it seems many investors might bank on cryptos as the Coronavirus continues to spread. Despite the last days, which saw Bitcoin and Wall Street having an odd positive correlation. As a matter of fact, Gold also
On the one hand, the global stock market is under pressure and continues to plunge with S&P 500 index recording its worst loss in almost a decade. On the other hand, governments are taking several measures to manage and combat the health crisis.
US Fed Cuts Interest Rates
Just yesterday, the United States Federal Reserves moved to cut interest rates by 50bps, calling it an emergency move to shield the US fledgling economy from the devastating impact of the Coronavirus, which has now spread to at least 47 countries.
The last time the Fed cut interest rates by half was in 2008, which came as a containment strategy at a depth of the Sub-Prime Great Recession just before the release of the Bitcoin whitepaper by Satoshi Nakamoto.
Interestingly, since its release to date, Bitcoin has gained around 9,000,000% returns, a feat which left many critics aghast. Indeed, with the stock market in chaos and the interest rate cut in 0.5%, it would be exciting to see whether Bitcoin and crypto can thrive in these tumultuous economic conditions around the world.