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Author Topic: Influence of FED Action on Bitcoin  (Read 144 times)
hASHmETAL
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December 13, 2017, 09:10:30 AM
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How FED actions like interest Rate hike (fast or slow), Balancesheet Normalisation (reducing Dollars Circulation in Fast or Slow Rate) influence on Bitcoin ?
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m0gliE
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December 13, 2017, 01:12:44 PM
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Hi,

I am not sure it has any effect..

I mean, can you tell exactly why the bitcoin is rising or going down? There must be many factors involved, but it is so hard to grasp the extend to which it affects rates...

Then, we are talking about the FED. The actions of such institution have effects on many people, in a country (the US) that is generally considered as the ruler of the world. So actually any decision taken by the FED, and more specifically those which have direct effect on money, should be a concern for anyone.
However I think we are talking here about two separate worlds. I highly doubt bitcoiners are scrutating FED decisions on a daily basis and I would be very surprised to learn that the FED is trying to get involved in bitcoin (n its own name I mean, sure they are trying to understand it but since bitcoin grants no overall control, they cannot admit it for now).

Actually, what's your opinion about that? I guess you have ideas about it, as you started this topic?

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December 13, 2017, 02:15:45 PM
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I'm not always following the news from the US but when they reduced the dollar circulation? On my memory they've been "printing" dollars like crazy all the time. Bitcoin users usually are not paying attention on anything from FEDs but the emission of USD is still bringing the infliation. As BTC is normaly valued in USD then if the amount of USD will increase then the value of a single dollar will decrease and BTC will cost more in USD.

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December 13, 2017, 02:50:17 PM
 #4

How FED actions like interest Rate hike (fast or slow), Balancesheet Normalisation (reducing Dollars Circulation in Fast or Slow Rate) influence on Bitcoin ?

Bitcoin will go up as people move their funds (fiat, equities) into Bitcoin.  I don't see how any normal maneuvering of the Fed can influence Bitcoin. The US dollar is considered to be a stable currency. If the US were to experience double digit inflation then we could see a massive move to crypto. By massive I mean a 2% - 5% move of fiat holdings to crypto.
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December 13, 2017, 04:45:51 PM
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How FED actions like interest Rate hike (fast or slow), Balancesheet Normalisation (reducing Dollars Circulation in Fast or Slow Rate) influence on Bitcoin ?

Bitcoin will go up as people move their funds (fiat, equities) into Bitcoin.  I don't see how any normal maneuvering of the Fed can influence Bitcoin. The US dollar is considered to be a stable currency. If the US were to experience double digit inflation then we could see a massive move to crypto. By massive I mean a 2% - 5% move of fiat holdings to crypto.

I guess the FED will try to make some moves to incentivize cashing out money out of the crypto ecosystem (mostly Bitcoin) by changing rates so all these people nervous about a potential bubble say "oh well, I guess USD is looking good again... time to sell". But on the long term, it will be clear that staying on BTC was the right move to increase your wealth (and in the meantime due volatility a lot of people will get shaken out). We all know how USD works. The debt will never stop growing, no amount of changes will make USD a legit savings account. You are not going to get rich having money on your bank account. I believe BTC is a good risk:reward bet.. nothing is guaranteed, but what's guaranteed is money in your bank account will never make you rich like I said. Only the rich are making enough money by holding USD. If you hold 10 million USD you can live doing nothing.

Related:

http://www.businessinsider.com/fed-december-meeting-focus-is-2018-path-of-rate-hikes-2017-12
Kronos21
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December 13, 2017, 05:29:48 PM
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How FED actions like interest Rate hike (fast or slow), Balancesheet Normalisation (reducing Dollars Circulation in Fast or Slow Rate) influence on Bitcoin ?

Bitcoin will go up as people move their funds (fiat, equities) into Bitcoin.  I don't see how any normal maneuvering of the Fed can influence Bitcoin. The US dollar is considered to be a stable currency. If the US were to experience double digit inflation then we could see a massive move to crypto. By massive I mean a 2% - 5% move of fiat holdings to crypto.
Whenever the inflation all the people will not go to the bitcoin use. Bitcoin is used as additional income and therefore people that want to make use it. For enterprises, the cryptocurrency is unacceptable so the salary they will pay in Fiat always. The fed will never be able to have the opportunity to work on a cryptocurrency. The worst they can do is complicate the process of exchange of cryptocurrency for Fiat.
jseverson
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December 13, 2017, 06:13:15 PM
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In the grand scheme of things? Next to nothing. People seem to overestimate the effects of these things to Bitcoin and vice versa, but the reality is too few people actually use Bitcoin to make a difference. Bitcoin can be used to sidestep these for sure, but we're not there yet.

I'm sure coming regulations are going to plug this hole too. It's not even a pessimistic view; just realistic.

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December 13, 2017, 09:02:20 PM
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A higher inflation rate can annoy citizens and move people to assets.  The first thought for these people would be gold, and the second thought would probably be silver.  Bitcoin is another possible (though risky) asset that could protect against fiat inflation.

Conversely, lower inflation rates are likely to preserve people's faith in fiat currencies.

If the inflation rate is low but the interest rate is near zero, it may incentivise people to hold physical cash, which can give them a false sense of security and prevent them from buying assets.

Overall though, it would still have a fairly small effect and this is all just hypothetical.
Proton2233
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December 13, 2017, 09:44:36 PM
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A higher inflation rate can annoy citizens and move people to assets.  The first thought for these people would be gold, and the second thought would probably be silver.  Bitcoin is another possible (though risky) asset that could protect against fiat inflation.

Conversely, lower inflation rates are likely to preserve people's faith in fiat currencies.

If the inflation rate is low but the interest rate is near zero, it may incentivise people to hold physical cash, which can give them a false sense of security and prevent them from buying assets.

Overall though, it would still have a fairly small effect and this is all just hypothetical.
Even if loan rates are zero this does not mean that there will be no inflation. Thus it is possible to stimulate the economy but someday everything will stop because everything will be all. In the mid-2000s we have seen how these government actions led to the 2008 crisis. I don't trust Fiat and so at any rate I'm not leaving bitcoin.
okala
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December 13, 2017, 10:22:19 PM
 #10

History has shown to us that those things "fed" decisions on interest rate and balancesheet  don't affect bitcoin like that and if it has any infect it has to be a significant one. I think there are things that affect bitcoin pricing and one of those things that has provided to affect bitcoin is news and tweet from elites on bitcoin.

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Hydrogen
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December 13, 2017, 10:24:14 PM
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In my mind, tax rates are far more important than interest rates. The methodology utilized by the Fed where they work hard to convince everyone interest rates are of greater importance than taxes or regulation could represent a diversion from real issues. The concept of the fed influencing widespread economic conditions from adjusting interest rates half a percent, could be described as a smokescreen.

One or two percentage points from an interest rate could be absolutely nothing in comparison to the divergence of taxes and other fees on an international scale. Maybe if global markets were less connected, US interest rates might have a big impact on a regional north american market.

These days with global markets being a real thing, investors are probably more concerned with corporate taxes than they are with interest rates:


hASHmETAL
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January 31, 2018, 03:12:20 AM
 #12

The "Rules of the Game" has changed now since last post, Tax Reforms for Corporate and Individual and FED Interest Rate policy willing to move faster and Reducing Balance Sheet initiation.

We have seen steady decline in value of crypto's, what is it signaling us?
hASHmETAL
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March 19, 2018, 06:12:07 AM
 #13

It's time to  take view yet another time as now the psychology of decision making is different compared with last FED decision!!

We have now the TRUMP nominated FED Chair!! What's your view?
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