U.S. Federal Reserve (Fed) Chairman Jerome Powell played a stabilizing force for the stock market on Friday. The chairman told investors that the Fed will take whatever steps it can to help bolster the economy after coronavirus scares. Meanwhile, the Bitcoin price has been wobbly of late.
The chairman had already indicated that a rate cut could be expected during the first half of the year. The new remarks increased confidence in the market that the Fed will do whatever it takes to protect the economy.
Stock Slide Halted
The Dow Jones Industrial Average (DJIA) had already collapsed more than 1,100 points on Thursday. The further decline of 900 points on Friday would have been one of the worst weeks in history. However, the Fed’s remarks buoyed investor spirits, bringing the market back up to close down just 372 points. In particular, the suggestion that the economy was strong but might need protection was met with a positive response, saying, “The Federal Reserve is closely monitoring developments and their implications for the economic outlook. We will use our tools and act as appropriate to support the economy.”
Bitcoin Blasted
The price of Bitcoin slid as well throughout the week and into the weekend. The loss of value was nearly commensurate with the losses inequities.[jnews_block_28 second_title=”Featured Stories” header_type=”heading_5″ number_post=”4″ boxed=”true” show_border=”true”]
The decline came as a bit of a surprise, considering that Bitcoin had been considered a safe-haven option for investors. However, other assets declined as well, with gold and silver selling off rapidly.
The Fed’s promises, however, are just that — promises. The question remains as to whether rate reductions can stave off serious economic woes in the next downturn cycle.
If coronavirus were to continue increasing and mutating, the need for Fed intervention would be painfully apparent. However, the Fed’s ability to truly manage the economy with basis-point changes and cash influxes remains something of an enigma going forward.
While Bitcoin may not have the support of the Federal Reserve, the underlying economic principles are more sound. Lower inflation, protection from politics, and a capped supply will eventually result in genuine stability.
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Jon Buck
With a background in science and writing, Jon's cryptophile days started in 2011 when he first heard about Bitcoin. Since then he's been learning, investing, and writing about cryptocurrencies and blockchain technology for some of the biggest publications and ICOs in the industry. After a brief stint in India, he and his family live in southern CA.
With a background in science and writing, Jon's cryptophile days started in 2011 when he first heard about Bitcoin. Since then he's been learning, investing, and writing about cryptocurrencies and blockchain technology for some of the biggest publications and ICOs in the industry. After a brief stint in India, he and his family live in southern CA.
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