June 19, 2024

The US Federal Reserve has cut interest rates – Bitcoin as a safe haven asset

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)trying to support the stock market due tothe onset of coronavirus announced a rate cut. The rate cut by 50 basis points (bps), or half a percentage point, was the largest such move 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 creates risks for the economicactivities. In light of these risks and in support of achieving maximum employment and price stability goals, the decision was made to reduce the target range for the federal funds rate by 1/2 percentage point»- said the Fed.

As rates go down, more money is introduced into the economy.money, forcing investors to buy multiple assets, with the S&P 500 expected to be the biggest beneficiary. Safe-haven assets like 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, Bitcoin halving is about to take place, which historically increases the price of the asset. In this regard, it is possible that investors will discover another safe haven asset.