[ad_1]
Is it possible that the decision of the US Federal Reserve to tighten its budget has contributed to the bitcoin and the wider cryptocurrency market that has lost ground in 2018? If so, what should investors expect from the independent central bank in the future?
Mati Greenspan, senior market analyst at the eToro trading platform, examined these and other questions on Tuesday in a wide-ranging webinar session.
The reduction in the Fed's balance sheet may have shaken bitcoins
Speaking of how different asset classes can show correlation, Greenspan said that the Fed's ongoing quantitative tightening program may have been one of several reasons why the bitcoin price has fallen so badly last year.
He explained that the Fed's decision to reverse its bond purchases in a period of crisis has caused a wave of sales in all the mainstream and nascent markets, including US securities, stocks and cryptocurrencies. The decision took the money from the system when the Treasury started looking for new buyers for their debts, thus alienating investors from their buying habits.
In 2017, Greenspan pointed out, the price of bitcoin has increased thanks to quantitative easing led by the central bank and the program of tighter rates. While cutting a $ 4 trillion Fed portfolio remains under autopilot mode, it would greatly increase the Fed's interest rate by another quarter of a point. Other analysts predict that the quantitative narrowing program will run until the Fed's balance sheet enters the range of $ 3.6 to $ 3.7 trillion. When this happens it can not be foreseen.
The economists of Morgan Stanley believe that securities sales will continue until September. TD Securities of New York has set the deadline until October. Barclays plays its forecast more securely by closing the program in mid-late 2019. "Deutsche Bank sees that it will extend until the end of 2019, while UBS expects the program to end in June 2020 at $ 3.5 trillion.
Sums of all indications that the bitcoin could still be within a downward correction against the US dollar. It is the same for other markets, including S & P 500, Nasdaq and Dow Jones.
Deal with the US-China trade war
While the closure of the US government proceeds on its 19th day, Greenspan has hinted that it is not influencing progress towards the end of the ongoing trade struggle between the United States and China.
"The US-China trade war seems much more promising these days, they have a deadline of March 1 to conclude an agreement together," said the analyst while weighing the possibility of expiry extensions.
Greenspan also deepened the market data coming out of China which, for him, were not "grandiose". Already fell below the 6% level, the decline in GDP, as noted by Greenspan, may have been caused by the US-China trade tussle. Looking through a magnifying glass also shows that domestic demand in China had been weaker even before US President Donald Trump led his trade war.
Emerging markets and Bitcoin
The economic tightening against some of the emerging markets, such as Venezuela, Turkey and Iran, could make the dollar stronger. Their local currencies, predicted by Greenspan, would probably succumb to fines and quantitative restraints and the Fed rate hike by August. These markets could see a ray of hope if the Fed decides to slow down its plans to remove money from the market and make the loans more expensive. Such a unilateral decision could lift some weight off the shoulders of troubled economies.
At the same time, cryptogens have already begun to predict that the markets stripped of the dollar would have started to opt for bitcoin as an alternative value reserve. Speculation could allow the digital currency to add some bullish sentiment to its market, considering that it will already have achieved an adequate institutional exposure by mid-2019.
If I lived in Iran I would keep 50-70% of my purchasing power #bitcoin. Paying satoshis is much safer than paying with Rial.
The average monthly salary of Iran is ~ 1 – 1.5 million satoshi.
Better, faster, cheaper. # satoshi2019 https://t.co/ZYrxErfVro– Ruben Johansen⚡️🔑 (@ruben_johansen) January 7, 2019
Brexit could cause market volatility
Avoiding politics could be difficult for global investors as Brexit also marks its influence on upcoming market actions. Greenspan believes that uncertainty about events such as the trade war between the US and China and Brexit itself can bring enough volatility to the market, which could be exploited by investors to crank out intermediate gains. If the decision on the divorce of the United Kingdom proposed by Europe is further delayed, as the parliamentarians vote the referendum and cause Theresa May to seek a decision by general elections, the shares, bonds and the pound of the United Kingdom could look at a roller coaster ride in their markets.
If Brexit were to happen on time, Greenspan said, then it would mean a stable period for the UK domestic market.
Bullish on Ripple (XRP) in 2019
"The XRP is an incredibly unique digital asset and I am optimistic," said Greenspan.
The analyst explained that despite his long feeling about cryptocurrency, he has some reservations about Ripple Labs that holds most of the XRP tokens in reserves and how the US Securities and Exchange Commission will classify the token: security or utility. Greenspan believed that naming XRP as a security token would be extremely bearish for cryptocurrency, adding that he thinks it functions as a utility.
Those millionaire XRP units in the reserves do not count if Ripple takes over the banking system, he added.
Shutterstock foreground image. TradingView Charts.
[ad_2]Source link
