US Fed cuts interest rate - Bitcoin as an asset-refuge

After the worst week for the stock market since the financial crisis, the Federal Reserve (Fed) in attempt to support the stock market duethe onset of coronavirus has announced a reduction in rates. The reduction of the rate by 50 basis points (bp), i.e. by half a percent, was the largest step of this kind since December 2008.

According to authorities, this step is intended to weaken the influence of the coronavirus and accelerate the growth of the stock market, which fell by more than 9% compared with historical highs.

“Coronavirus poses risks to economicactivities. In light of these risks and in support of achieving the maximum goals in the field of employment and price stability, it was decided to reduce the target range of the federal funds rate by 1/2 percentage point ”- said the Fed.

As rates go down, they introducemoney, which forces investors to acquire several assets, and the S&P 500 is expected to become the largest beneficiary. Shelter assets - gold and other precious metals will also be a popular choice.

Gold, Favorite Asylum Asset, 2019rose to nine-year highs, gaining more than 5% over this period. However, over the same period, bitcoin added more than 30%, trading at the time of writing, about $ 8800.

In addition, a bitcoin halving is due to take place, which historically raises the price of an asset. In this regard, it is possible that investors will discover another safe haven asset.

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