The U.S. central bank decided that the Federal Reserve System (Fed) would maintain a’zero interest rate’. Bitcoin prices, which fell due to concerns over the Fed announcement, rebounded slightly.
On the 27th (local time), the Fed announced that after the regular meeting of the Federal Open Market Committee (FOMC) held over the past two days, the interest rate will be frozen at 0.00~0.25%. In a statement, the Fed explained that “the economic and job market improvement has slowed in recent months.”
The asset purchase program is also maintained as it is. The Fed is buying $80 billion worth of US Treasury bonds and $40 billion worth of mortgage securities (MBS) every month to help the economy recover.
With the Fed maintaining zero interest rates, the dollar is expected to weaken modestly in 2021. Kyobo Securities analyst Lim Dong-min predicted in a report released today that “the US dollar will show a modest weakness while maintaining its key currency status for the time being.”
After the Fed’s announcement, the price of bitcoin rose slightly. As of the coin market cap, on the 28th, the price of Bitcoin fell to a minimum of $29,700. This is due to concerns that the Fed will do’tapering’ to reduce its quantitative easing policy. According to CoinDesk, Darius Sit, co-founder of QCP Capital, predicted that “if the Fed pushes for tapering, Bitcoin will face strong selling pressure.”
The US dollar liquidity supply is seen as a good thing for cryptocurrencies including Bitcoin. It is predicted that as the value of the dollar declines, Bitcoin will emerge as an alternative investment to store value. After the Fed’s statement to maintain the existing policy came out, the price of Bitcoin returned to $31,000.
The industry predicts that long-term structural changes will be made. Analyst Lim Dong-min said, “After 2021, the real economy and financial markets are expected to be under pressure of a great transformation.” He predicted that “with the advent of the 3.0 era of the currency war, a new value standard system will be formed from the gold standard-the dollar standard-the real trade standard.” He cited △CBDC and traditional finance reform △Techpin and digital finance △Blockchain and decentralized finance as the phenomena to be noted in the future.
Some analyzed that there is a high possibility of a short-term price decline. Matthew Dibb, COO of Stack Fund, told CoinDesk, “Bitcoin has failed to exceed $32,500 in the past six days. According to technical analysis, it will continue to decline for the time being, and the price may drop to $26,000. There is” he explained.
D Center Reporter Noh Yun-ju