The Coronavirus continues to be a hot topic of discussion around the world. Particularly in China and the US, there has been an emphasis on its effect on the economies. The two largest economies have been shaken and the effects are being felt in investor’s wallets. The U.S stock is currently having one of its worst runs. The drop and the continued fear has prompted many to look unto the FED to cut interest rates. Such a move in the near future could see Bitcoin come out soaring.
U.S Is Headed For A Recession
The Coronavirus promises to leave the economy on its knees. Led by market drops, the economy is struggling. And as the markets drop, the chances of an interest rate cut go up. MarketWatch notes that the probability of at least two rate cuts before December is at 78%.
But, it remains too early for the FED to make this call. As analyst The Wolf Of All Streets notes, this would be a dangerous move as the full impact of the Coronavirus is still unknown.
The FED is being pressured to react to the virus, which is dangerous. QE and cuts now before understanding the full breadth of impact could leave them with no dry powder when they need it most. Rate cuts and QE can’t fight a black swan event – they can just take the edge off.
— The Wolf Of All Streets (@scottmelker) February 27, 2020
While this is true and it remains too early to make the cut, it remains a fate that the U.S cannot escape. As the epidemic prolongs, China will remain on lockdown and will continue to affect the American investor and far more consumers. The country is one of the biggest producers and as long as factories and supply chains are locked, this will shake the global economy.
There is further concern that there could be an outbreak in the U.S. This was confirmed by The Centers for Disease Control on Tuesday. The agency noted that the disease would inevitably spread to the U.S. This will further slow the economy and see FUD reach an all-time high.
The FED is certainly destined to cut interest rates in the weeks or months to come. This will help stimulate the economy and get the U.S back on track.
Bitcoin is set to come out as a winner. As the FED cuts interest rates, this will see more money printed and the currency further devalued. Bitcoin has been hailed as an asset that cannot be manipulated this way, hence continuing to add value over time. Historically, Its popularity hits the roof after FED interest cuts.
Israeli scientists today announced that there would be a Coronavirus vaccine in the next three weeks. This will reduce FUD and see more stability and sanity come back to the markets.
A coronavirus vaccine should be ready in three weeks. You are all not going to get infected, as some want everyone to believe. Still would need to undergo clinical trials.https://t.co/YpMjg39HyZ
— Alex Krüger (@krugermacro) February 27, 2020
Source: FED Under Pressure To Cut Rates As U.S Stares At A Recession, Fuel For BTC?