Bitcoin (BTC) is getting most of its price support from the Federal Reserve itself, believes entrepreneur Tyler Winklevoss.
In an August 25 tweet, exchange co-founder Gemini argued that Federal Reserve policy is and will continue to bolster Bitcoin’s fortunes.
Inflation boost is a boost for Bitcoin
The reason, Winklevoss said, is that the consequences of the coronavirus containment measures on the U.S. economy will mean that the central bank will accidentally make Bitcoin more attractive and the dollar less conspicuous.
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On Thursday, Federal Reserve Chairman Jerome Powell will deliver a speech that commentators hope will contain an announcement on how to let inflation rise dramatically.
This alone makes Bitcoin, which has a fixed and unchanging broadcast and supply, instantly attractive.
„The Federal Reserve, under the leadership of Jerome Powell, continues to be Bitcoin’s biggest proponent,“ Winklevoss wrote.
„On Thursday, he will give a speech on how the Fed will begin to target higher inflation.
As Cointelegraph reported, anticipation around the Federal Reserve inadvertently obstructing safe havens like gold and Bitcoin has been building as both assets see price increases in line with central bank balance sheet increases.
Earlier this month, Edward Yardeni, president of Yardeni Research, said increased inflation targeting would be „wildly bullish“ for precious metals.
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More years of 0% interest rates
For its part, Bloomberg reports that interest rates should remain close to zero for five years, although the possibility of longer periods is not ruled out.
That would mimic the behavior after the 2008 Global Financial Crisis, which saw rates remain unchanged at about 0% until the end of 2015.
„I would not be surprised if interest rates remain at zero five years from now,“ former White House chief economist Jason Furman told the publication.
While Bitcoin and other crypto currencies fell by as much as 15 percent, an altcoin listed in Huobi rose by 60 percent
Fed interest rate historical chart
So far the Federal Reserve has kept away from negative interest rates, departing from a practice that has been present under the auspices of the European Central Bank (ECB) for several years.
In May, a report argued that Cryptosoft was a natural focus for fund managers seeking to mitigate the impact of such financial policy.