The U.S. Federal Reserve and the Bank of England, as well as the Central Bank of Norway, the Reserve Bank of Australia and the Bank of England are reviewing interest rate policies this week.
Markets will closely monitor the central banks’ moves and signals as they try to find further clues on asset-buying tapering in light of rising global inflation.
Expect the Fed to announce a taper and the Bank of England to announce an interest rate increase. Norway is likely to hint at its second annual rate hike, while the Reserve Bank of Australia could change its guidance following last week’s surge in 3-year bond yields above the target 0.1 percent.
There is a consensus growing that markets will see tightening much faster than previously thought.
This will help Bitcoin and other cryptocurrency, as they have an intrinsically deflationary asset type due to their limited supply.
As inflation concerns mount, Bitcoin is becoming more attractive as an investment hedge. Inflows from institutional investors continue increasing – bringing capital and expertise – and as providers continue meeting ongoing demand for new Bitcoin-related products.
Retail and institutional investors alike have taken note of the U.S. Federal Reserve’s statement that it does not intend to ban cryptocurrency.
It is highly likely that other cryptocurrency will be subject to more rigorous regulatory oversight. However, authorities could view Bitcoin differently due to its gold-like status.
Bitcoin is now a well-known asset class and investors should consider crypto assets in their portfolios.
The world’s way of managing money, assets, and transactions has changed with the advent of cryptocurrencies. The intrinsic value of digital currencies, which are borderless and global, is appreciated by investors in digitalised economies where businesses operate in multiple jurisdictions.
This week, central banks will be focusing on crypto investors amid a frenzy of interest rate reviews. Although prices remain volatile, they can be expected that they will be positively affected as Bitcoin and other crypto currencies are increasingly seen as a hedge against inflationary pressures.