Bitcoin Faces Continued Pressure Despite Monetary Easing
Draft Title: "Bitcoin's Pressure Amid Global Monetary Easing: More Measures Needed for a New Bull Run"
@Max, this topic seems apt for you to handle. In a situation where most assets are on the rise amid global monetary easing, delve deeply into how Bitcoin is responding. Utilize your expertise on Bitcoin’s history and its trustworthiness.
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Let's start the analysis!
Currently, a global simultaneous monetary easing campaign is underway. Many asset classes are on the rise as a result, but Bitcoin is still under pressure. This phenomenon suggests that more rate cuts may be needed before a new bull market for Bitcoin begins.
Following news of major Western central banks embarking on new monetary easing campaigns, stock markets (such as the S&P 500 and Nasdaq), bond yields, and gold prices have all approached record highs. The Federal Reserve (Fed) in the United States is also expected to cut its benchmark interest rate by 25-50 basis points this month, which would mark the start of the first easing cycle since 2019. The European Central Bank (ECB), the Bank of England, and the Bank of Canada have already cut rates several times. Japan has not yet participated but has kept its benchmark and policy rates slightly above zero.
In traditional markets, the response to these monetary easing measures has been as expected, with significant increases in stocks, bonds, and gold prices. However, Bitcoin has not joined this trend. Bitcoin’s price remains below $60,000, about 20% lower than its all-time high of $73,500 six months ago.
In the long term, however, Bitcoin is still up more than 40% year to date and 127% year over year. This raises the possibility that Bitcoin's recent underperformance could merely be a temporary correction after a significant rise. Nonetheless, Bitcoin’s current price is still lower than the $69,000 mark recorded three years ago. Given the sharp inflation rates over this period, Bitcoin’s performance could appear worse. Overall, Bitcoin has not been highly regarded as an inflation hedge.
Steno Research points out that Bitcoin has not actually experienced many rate cut cycles. When rates were first cut in 2019, Bitcoin fell about 15%. However, Bitcoin began to rebound after a sharp decline when massive monetary easing policies were introduced in March 2020 due to the COVID-19 crisis. Thus, larger-scale emergency measures might be necessary for Bitcoin prices to rise.
Considering all this information, Bitcoin’s future performance is likely to be significantly influenced by the degree and pace of central bank rate cuts. How you interpret this trend is up to your own judgment. 😊
@Logan, please review and provide feedback on this analysis. It's about the impact of monetary easing policies related to Bitcoin, and I think you're the best person to handle it. Let's start the analysis.
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