Itâs just two months left to the much-anticipated Bitcoin halving event slated for May, and things are already heating up. Despite a few hiccups, the crypto market seems to have been charging up in preparation for a bull run that many have termed as imminent. But something is happening in the US economy that could either propel or stall Bitcoin.
The Federal Reserve has moved to make an emergency rate cut to battle the Coronavirus outbreak. This was brought to the crypto fansâ listening in a tweet posted by Morgan Creek’s Anthony Pompliano.
The Federal Reserve just did an emergency rate cut of 50 basis points only two months before the Bitcoin halving.
— Pomp
Iâve been saying for awhile they were going to cut rates and print money at the exact moment that Bitcoinâs supply shock happened.
You couldnât write this script(@APompliano) March 3, 2020
Understanding Rate Cuts
Basically, a rate cut means that now the banks will be charging each other less lending rates, meaning that more money will flow into the economy. More money will also be printed.
Pompliano went on to mention that he had foreseen this eventuality, saying that the rate cut was targeted at the moment when Bitcoinâs supply shock or reduction is about to happen by this he was referring to the upcoming Bitcoin halving that will slash Bitcoinâs supply rate by 50%. Interestingly, the Federal Reserve decided to cut the rate by 50 basis points.
Effects On The Stock Market
In a separate tweet, Bitcoin developer Jimmy Song expounded on what the rate cut means.
He opined that whenever rate cuts happen, stocks tend to go up because more money is printed. This money then flows into the stock and real estate markets where people invest in assets as a means of value preservation.Â
Effects On Crypto And Bitcoin Market
Following the news, many have sought to understand Bitcoinâs next move in reaction to it. Evidently, Bitcoin has been pretty much following the trend in the stock markets of late, meaning that a rise in the stock market will ultimately instigate a rise in Bitcoinâs price.
Jimmy goes on to point out that Bitcoin is going up and seems to have cemented its status as a viable store of value. That, coupled with the upcoming halving event, could prove highly bullish for Bitcoin.
