The price of bitcoin seems to be consolidating around the $9,500 region following its recent halving event. The digital currency price movement has been hovering around this point in the last two weeks and is seriously testing the $10,000 level that has proven to be a critical psychological barrier over the past few years.
The consolidation of Bitcoin’s price is happening in the background of the Federal reserve printing some more new money. Creating money out of thin air has become one of the preferred solutions by the US government as it seeks to combat the effects of the coronavirus driven economic crisis.
The Fed, US central bank, has deployed a raft of measures to stabilise the economy but the printing of new money has taken centre stage. The Fed chairman, Jerome Powell defended the institution’s actions while speaking to news anchor Scott Pelley on the 60 minutes interview aired on Sunday saying
We print it digitally. So as a central bank, we have the ability to create money digitally. And we do that by buying Treasury Bills or bonds for other government guaranteed securities. And that actually increases the money supply. We also print actual currency and we distribute that through the Federal Reserve banks.
This incessant money-printing spree has become of great interest to the bitcoin and cryptocurrency community. Particularly, the crypto twitter community displayed their reservations about the Fed’s chair comments during the interview by pointing out the massive difference between the central banks currency and bitcoin. Marty Bent, a popular podcaster tweeted that it was harder to implement such inflationary measures with Bitcoin.
“We print it digitally.”
The “we” here is five people voting on changes to monetary policy within the Federal Reserve system during FOMC meetings.
5 out of 330,000,000. That’s all it takes to change US monetary policy.
Much harder with bitcoin.
— Marty Bent (@MartyBent) May 18, 2020
These statements have some high level of truth especially considering that the bitcoin halving event had a deflationary impact on the cryptocurrency. Therefore, as the Fed floods the market with an unlimited supply of cash, Bitcoin solidified its position as sound money by lowering its annual supply by half. The crypto community members saw the interview as direct promotion of bitcoin due to its inability to be manipulated through governmental intervention.
Federal Reserve Chairman Jerome Powell on today's 60 Minutes: "We are not out of ammunition by a long shot. There is really no limit to what we can do with our lending programs."
That's a weird way of saying "buy Bitcoin"… pic.twitter.com/Ks2wNiXFUU
— Nick Chong (@n1ckchong) May 18, 2020
It is no coincidence that the open admission by Powell about flooding the economy with new money had a positive effect on bitcoin as people continue to realise the strengths of the virtual asset. This is evidenced by the recent surge in bitcoin options volume and the increased price stability in the post-halving period. These are signals of bitcoin’s strength and growing reputation as sound money.
Image courtesy of Pixabay
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