In the past two days, central banks in four countries in the Asia-Pacific region have announced interest rate cuts. The “safe haven property” of Bitcoin, the largest cryptocurrency market capitalization, has once again attracted the attention of investors.
The Bank of Thailand announced on Wednesday that it will cut its benchmark interest rate by 25 basis points to 1.5%. It believes that a stronger Thai tycoon may have a greater impact on the economy in a volatile global trade situation. On the same day, the Bank of India announced that it would cut the benchmark repo rate by 35 basis points to 5.4% to support economic growth. Subsequently, the New Zealand Federal Reserve cut the official cash rate by 50 basis points to a record low of 1%, and the Philippine central bank cut the benchmark interest rate by 25 basis points to 4.25%.
So far, this year's global interest rate cuts have spread to more than 20 countries around the world. Analysts believe that in the face of slowing economic growth and global instability, interest rate cuts are an important tool for stabilizing the economy, and the current implementation of loose monetary policy has become a global trend. Coupled with the protracted and growing Sino-US trade war, global investors are looking for opportunities to purchase safer assets such as government bonds, gold and bitcoin.
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Former Goldman executive Raoul Pal said on Twitter, “We are at the most important moment in the foreign exchange market in the past 30 years. The dollar has an uncontrollable upward risk.” He said that at least seven legal tenders are depreciating, the dollar The strength is spurring a massive wave of global deflation, which could lead to a financial crisis. He believes that the only good news is that this will push bitcoin prices up.
According to Bloomberg, the correlation between Bitcoin and traditional “safe haven” gold has soared to 0.837 in the past three months from the previous 0.496, almost doubling. This shows that the uncertainty of the global economic and political situation makes investors increasingly inclined to regard “digital gold” bitcoin as the safe-haven asset like gold. Jeremy Allaire, CEO of the encryption payment company Circle, also said this week that Bitcoin is becoming "a non-sovereign, highly secure, Internet-based stored value mechanism."
Chris Reinertsen, chief marketing officer of Rhythm Technologies, said in an interview with Forbes that Bitcoin is joining the ranks of traditional safe-haven assets such as US Treasury bonds, gold and Swiss francs. “The Chinese yuan has just fallen below the 11-year low against the dollar,” he said. “A lot of money flows into safe-haven assets, including bitcoin. In the past few years, as global economic uncertainty has increased, bitcoin has grown. The more the situation is affected by the macroeconomic situation, this trend has begun to emerge."
OpenLTV CEO Kirill Bensonoff also agreed. He said to Forbes, "I believe that Bitcoin is becoming a safe-haven asset like gold. Although it is not completely related to gold, Bitcoin will rebound whenever the major markets are in a downturn. I believe that more will be seen soon. The money flows into Bitcoin."
However, some people are cautious about this. Keith Hilden, founder of Relex Capital, told Forbes that as the market tries to restore balance, the recent surge in bitcoin prices is more of a speculative act.
By Liang CHE
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