Crypto Markets Need Looser Fed Policy Before Moving Higher
A well-known crypto analyst, Benjamin Cowen, has highlighted the need for a looser monetary policy from the Federal Reserve for digital assets like Bitcoin to experience significant growth. In his latest video, Cowen discusses how the market's current stagnation is linked to the Fed's tight monetary stance.
The Role of the Federal Reserve
The Federal Reserve, often referred to as the Fed, is the central bank of the United States responsible for monetary policy. This includes setting interest rates and controlling the money supply. A tight monetary policy means higher interest rates and less money circulating in the economy, which can slow down economic growth but control inflation. On the other hand, a looser monetary policy involves lower interest rates and more money supply, encouraging spending and investment.
Cowen notes that since March, Bitcoin has been slowly declining due to the Fed's reluctance to ease monetary policy. He speculates that a shift towards a looser policy, potentially by September, might reignite the crypto market's growth.
Bitcoin's Market Movements
Cowen explains the current volatility in Bitcoin's price as a result of changing expectations regarding the Fed's actions. Bitcoin, the leading digital currency, is known for its price fluctuations, often referred to as whipsaw action when prices rapidly move up and down. This behavior is partly due to differing predictions on when and how the Fed will adjust its policies.
As of now, Bitcoin is priced at $58,776, reflecting a 4.19% decrease in the past 24 hours. This downward trend highlights the impact of monetary policy on cryptocurrency markets.
Future Outlook
Looking forward, Cowen suggests that without a looser policy, the crypto market might remain stagnant through 2024. However, should the Fed decide to lower interest rates and increase the money supply, it could provide the necessary boost for digital assets to climb higher.
Disclaimer: The opinions expressed in this article are not investment advice. Investors should conduct their own research before engaging in high-risk investments in Bitcoin, cryptocurrencies, or digital assets. It's important to recognize that all trading carries risks, and losses are the responsibility of the trader.
