The US Federal Reserve (Fed) today has declare emergency interest rate cuts to prepare to cope with the economic threat of corona virus.
This move caused the interest rate to drop by 0.5 percentage points, bringing the interest rate down to the target level of 1% -1.25%. In a statement, the Fed said that this action was a response to the “economic development risk” posed by the corona virus.
“In view of these risks and to assist in achieving the goals of employment stability and maximum prices, the Federal Open Market Committee today decided to lower the target range for federal interest rates,” Fed said in a statement.
After this news, the Bitcoin (BTC) price quickly increased from around $ 8,750 to $ 8,880, though the price soon corrected to $ 8,710 after that.
Some market participants believe that the Federal Reserve cutting emergency interest rates – for the first time since the 2008 financial crisis, is a sign of price increases for the cryptocurrency market, as investors will Looking for alternative investment opportunities.
“The Fed's emergency rate cut is essentially bullish for the cryptocurrency market, especially if concerns about the financial sustainability of this method or the dollar weakens after this action,” Blockchain.com market leader Charles McGarraugh wrote in an email to The Block.
However, as previously reported, interest rate cuts are unlikely to have a positive impact on Bitcoin price. In contrast, in the last three interest rate cuts, Bitcoin's average returns over a period of 1 week, 1 month and 3 months were -5.0%, -20.9%, -11.0%, respectively.
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According to The Block
Translated by ToiYeuBitcoin