Despite rising inflation and fewer expected rate cuts from the Federal Reserve, Bitcoin remains positive.
No Rate Cuts, No Problem
The bond market now expects only three rate cuts this year, down from six. This shows that the market doesn’t think the Fed can control inflation.
Fed’s Rate Hikes May Be Stimulating the Economy
A report by Ritik Goyal argues that the Fed’s rate hikes have actually helped the economy by:
- Increasing government interest payments, which act as a stimulus.
- Subsidizing the banking system, which benefits banks.
- Encouraging new housing construction, which boosts GDP.
Bitcoin Benefits from Fiscal Dominance
Goyal believes that the Fed’s traditional monetary policy is no longer effective because of government spending. This could create an environment that favors assets like Bitcoin.
Crypto Expert Supports the Theory
Crypto expert Will Clemente agrees with Goyal’s findings. He says that high debt levels mean that rate hikes will actually stimulate the economy by giving more money to people who buy assets, including cryptocurrencies.
Bitcoin’s Current Price
At the time of writing, Bitcoin is trading at $61,173.
