How Do FED Decisions Affect Bitcoin (BTC)?

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Federal Reserve Governor Jerome Powell is preparing to signal a tolerance for higher inflation this Thursday. Many people think Thursday’s decisions will be the biggest measures ever.

While the exact content of the decisions to be taken for now is unknown, it seems likely that new policies will undermine the long-term strength of the US dollar.

The 10-to-head rate, which measures inflation expectations, rose from 0.5% to over 1.6% after the collapse in March. While Bitcoin has largely followed the metric higher in the past five months, the dollar index has dropped by about 10%.

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The leading cryptocurrency has made bigger earnings year-to-date in US dollars compared to other currencies such as Bitcoin, euro and Japanese yen. This situation is shown as signs that Bitcoin’s rally is positioned very well.

However, despite the rising effects for Bitcoin in the long run, the short-term dollar index looks a bit more conservative. For example, the dollar index has shown signs of upward trend in the same timeframe, despite the recent weaknesses in Bitcoin prices.

Due to overly leveraged transactions, we can see the dollar rise while Bitcoin falls in the coming weeks. Although the decisions to be taken by the FED on Thursday are not fully known, it shows that the dollar index will catch a delay in the near term, which will negatively affect the Bitcoin price.

Bitcoin, which has recently been seen as a store of value, may decline after the FED takes a decision to relax the markets. Because of Covid-19, which has become a global epidemic, many investors have preferred to switch to more reliable ports in order to protect their existing assets. Along with gold and silver, which are accepted as reliable ports, Bitcoin has attracted much attention during this process and received support from both traditional and institutional investors. The increasing number of Bitcoin wallet addresses can also be shown as proof of this.

See Also
Bitcoin (BTC) Futures Set a New Record

Bitcoin (BTC) continues to be traded at $ 11,295 as of writing.


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