- The Federal Reserve has cut the interest rate by 0.5%, triggering the Bitcoin
- Large investors continue to pursue a strategy of long-term BTC accumulation
- Many countries rapidly adopt BTC, with El Salvador and Bhutan actively accumulating
- Blackrock is preparing for a FED crisis by accumulating Bitcoins
- A falling dollar could boost Bitcoin, as it already has in 2020-2021
The long-awaited interest rate cut happened, which had an immediate impact on the markets and Bitcoin with the rest of the crypto sector.
At the same time, major investors and entire nations are not backing down from their cautious attitude toward the future fate of the dollar, prioritizing Bitcoin as an alternative reserve asset.
Among such investors, we can observe both the Blackrock you know, and entire states like Salvador and unexpectedly Bhutan, that the accumulation of Bitcoin for many remained shady.
All of this is happening against the backdrop that interest rates may not work and a major collapse awaits the dollar, as the same Blackrock is openly discussing.
The Impact of the Fed on the Bitcoin Market
The US Federal Reserve decided to cut interest rates obviously late, but it still had a positive effect, and if this is not the last cut it will continue.
Meanwhile, Bitcoin price is currently still trading around $63K within this channel from March, where we have again hit multi-month resistance and if we can’t break it we may go back to test the $52K support.
However, large investors are not paying attention to these short to medium-term details and continue to buy Bitcoin as part of their DCA strategy.
El Salvador continues to buy more with already 5878 Bitcoins, apparently seeing its value over the long haul, and there is also a country that unlike many without loud announcements is accumulating.
The Kingdom of Bhutan has acquired and mined 13,000 Bitcoins since 2019, more than double what El Salvador acquired in September 2021.
This encourages us to look deeper than general statements and wonder how many investors are actually playing the long game and accumulating Bitcoin without much fuss.
Blackrock Reminds Everyone of What Is to Come for the Dollar
Given all of Blackrock’s hypothetical hidden motives and actions, they serve as a pretty good indicator of how big investors view the market in terms of a long-term strategy, as their recent report also makes clear.
Blackrock is quietly preparing for the US Fed crisis with the help of Bitcoin hoarding.
The fact that the U.S. Federal Reserve has officially started the cycle of rate cuts, having already reduced it by 0.5%, with another 0.5% coming this year and by 1% next year, investors estimate as a further depreciation of the dollar and the inevitable quantitative easing.
According to some investors, the U.S. Federal Reserve has literally announced a schedule for devaluation of the dollar, and Blackrock, which is preparing to assess the U.S. also to a debt crisis of $35T respectively national debt, which grows by $1T every 100 days.
Fearing that the U.S. is on the verge of collapse the world’s largest asset manager Blackrock warns us of its growing concern and predicts that this debt spiral will lead to a further increase in institutional investor interest in Bitcoin.
That’s why Blackrock, like many other investors is hoarding Bitcoins, taking them out of the market as much as they can before demand for them grows, and maybe even artificially keeping the price low for as long as possible.
Indicators that Big Investors Pay Attention To
Let’s look at the dollar’s uptrend since 2010 and we also see that the rise has continued since then, however, we also see that it has fallen below its major support twice between November 2020 and November 2021.
Compare Bitcoin to this period when the US dollar fell below that support between November 2020th and November 2021st – Bitcoin parabolic exploded.
It was during this time that Bitcoin had the most powerful bullish rise in that entire cycle of $10K to $69K is what was seen the last time the dollar fell below this support.
Gold is also very correlated, hitting all-time highs on the back of a falling dollar, and their behavior is very similar.
What Are the Movements from Other Nations?
Going back to the Blackrock paper, they point out that growing concern in the US and abroad about the state of the US federal deficit and debt has increased the attractiveness of potential alternative reserve assets as insurance against possible future events affecting US dollars.
Some are calling Bitcoin amendment money similar to the Second Amendment of the US constitution, also add that the US debt load of $35T and it seems that this dynamic is happening in other countries where debt is accumulating at a record pace.
This gives reason to think that other currencies will be in big trouble, not just the US dollar because it is just the leader of the same fiat system.
Blackrock adds that in their experience with their clients, this explains a large part of the recent growing interest of institutional investors in Bitcoin, as evidenced by El Salvador and Bhutan as we mentioned above, which may have already finally defined Bitcoin and that very alternative reserve asset.
It is also worth not forgetting about BRICS, which is in favor of creating a financial system based on Blockchain in recent years this economic coalition has intensified efforts to create its own cryptocurrency that should be backed by gold.
Many call this de-dollarization, for which there are no doubt obvious arguments. However, perhaps it is deeper than that, and could rather be called de-fiatization, aiming to create an effective international payment system that will be blockchain-based and have its own token.
This system should be an alternative financial network that could potentially include more than 159 foreign participants, which also poses additional challenges to the sustainability of the U.S. dollar.
In this context Blackrock calls Bitcoin a universal diversification, noting that the problem we have now around existing money is that they are subject to inflation and depreciation. Given their non-fixed fixed infinite supply in addition they are difficult to transact across borders and access to them is limited to outside of a specific country controlled by a central authority.
Bitcoin, in turn, has a fixed maximum supply of 21,000,000 units, with the supply growing and halving every four years, it has no border and is a digital source that allows for virtually instant global payments.
It is the first global monetary system truly open access it can be used as a monetary division.
The Growing Correlation Between Bitcoin and Gold
This includes also conventional gold, for example, look how the gold activity has grown in China.
You know that Bitcoin is digital gold and many say that what is happening today with Bitcoin has already happened before with gold e.g. the approval of spot Bitcoins is very similar.
If Bitcoin reaches the market value of gold it – will be worth $887,000 we are about 7% of the way there, so we could see a Bitcoin worth $1,000,000.
We’ve already heard that from Cathie Wood of ARK as she predicts that Bitcoin could be worth $1,000,000. We’ve also heard about it from Michael Saylor of Micro Strategy, so the possibility that Bitcoin could exceed that mark is here.
But how can this exactly happen as Bitcoin capitalization equals gold capitalization since it is $13T? Recall that Senator Cynthia M. Lummis spoke of a strategic Bitcoin reserve for the United States.
She even compared the adoption of Bitcoin by the United States to the moment of the Louisiana Purchase this purchase then helped the U.S. reach the next financial milestone.
“As families across Wyoming struggle to keep up with soaring inflation rates and our national debt reaches new and unprecedented heights, it is time for us to take bold steps to create a brighter future for generations to come by creating a strategic Bitcoin reserve. Bitcoin is transforming not only our country but the world and becoming the first developed nation to use Bitcoin as a savings technology secures our position as a global leader in financial innovation. This is our Louisiana Purchase moment that will help us reach the next financial frontier.”
The introduced Bitcoin Act establishes a strategic Bitcoin reserve for the United States that will serve as an additional savings vehicle to strengthen America’s balance sheet and ensure transparent management of Bitcoin savings by the federal government amid obscenely rising debt and deficits.
U.S. senators are already moving forward with Bitcoin as the new reserve of the United States in America naturally if it becomes a reserve asset of the largest economies in the world its price could rise significantly and may well overtake the market capitalization of gold.
Conclusion
Of course, these are preliminary estimates, not guarantees, and things can change at any moment. Nevertheless, such a synchronized vision about anything among simultaneous political figures, economic institutions, and the technology sector can already be called unprecedented.
A lot of public data speaks about it with one voice, and perhaps there is still a lot that remains in the shadows that could confirm it, or maybe disprove it.
We crypto investors and enthusiasts need to be very attentive, keep an eye on all factors and actors, and constantly monitor the development. Stay tuned.
