Major cryptocurrencies Bitcoin (BTC), Ethereum (ETH), and XRP have seen a downturn in momentum after a strong start in 2023, despite early forecasts of a strong rebound. However, this course can be changed by a leaked revelation from a well-known IT business.
The Federal Reserve (Fed) may have to resume its money printing machines as a result of the Fed’s enormous $33 trillion US “debt death spiral,” according to analysts at investment banking company Jefferies.
This action may lead to the US currency collapsing and a massive surge in Bitcoin prices that would surpass the value of gold.
Proponents of Bitcoin as a Safeguard Against Inflation
According to a recent Forbes article, Bitcoin’s much awaited halving event—which is sure to generate market volatility—is about to happen.
Bitcoin & XRP: $8T Outlook Amid Dollar Decline,Bitcoin & XRP: $8T Outlook Amid Dollar Decline
In a client letter seen by CNBC, Christopher Wood, global head of equities strategy at Jefferies, stressed that the G7 central banks—including the Federal Reserve—are not going to exit unorthodox monetary policies with ease. Notably, Wood views gold and Bitcoin as “critical hedges” against inflation’s comeback.
The Federal Reserve began shrinking its over $9 trillion balance sheet in the spring of 2022. The balance sheet had grown dramatically during the COVID-19 epidemic and the ensuing economic slowdown.
The process of removing liquidity from the financial system and placing the onus of newly issued debt on the private sector is referred to as quantitative tightening.
The US dollar entered a “death spiral.”
To control skyrocketing inflation, the Fed has reduced its balance sheet and raised interest rates quickly. This strategy, meantime, has sparked worries about a possibly detrimental “death spiral” for the US dollar, which would increase the value of Bitcoin.
In reaction to a US recession, Wood thinks that the Fed would be compelled to take a more accommodating posture. The reason for this change would be a longer than normal lag in the rate rises by the Fed intended to reduce inflation after the notable increase in the money supply in 2020 and 2021.
In June, BlackRock CEO Larry Fink, who had earlier voiced doubts about Bitcoin, underwent a significant change. A surge in interest in cryptocurrencies among Wall Street investors was spurred by Fink’s support for Bitcoin.
Since digital assets now have custodian agreements in place, institutional investors are more inclined to see Bitcoin as a viable investment choice, positioning it as a substitute for gold as a store of value.
Bitcoin & XRP: $8T Outlook Amid Dollar Decline,Bitcoin & XRP: $8T Outlook Amid Dollar Decline,Bitcoin & XRP: $8T Outlook Amid Dollar Decline