Donald Trump Makes Bullish Case for Bitcoin by Forcing the Fed to Cut Interest Rate

Reducing interest rates is a dangerous macro-economic policy that can lead to the creation of a bubble. Will Bitcoin come to the rescue?

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US President Donald Trump recently amplified his pressure on the US Federal Reserve by demanding lower interest rates, which is bullish for Bitcoin.  

Trump’s tweet comes just a week before Chairman Jerome Powell is expected to cut rates for the first time in more than a decade.

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A major policy change

By taking a tough stance again the Fed, the POTUS wants to weaken the US Dollar to be on the same page with the European Union and China. According to Trump, other countries are manipulating their currencies to gain a competitive edge over the US.

According to the Wall Street Journal, the central bank will cave in to Trump and lower interest rates for by a quarter-percentage point after its policy meeting that is slated for July 30-31. That would be the first cut in a decade.  

The US market has already factored in the upcoming policy change, so a U-turn could deliver a major blow.

Possible implications

Lower interest rates usually lead to higher inflation given that more people are able to borrow more money, thus increasing their purchasing power.

Even though Trump explicitly states that he’s not a fan of Bitcoin, urging rate cuts might do wonders for the crypto king.

Money printing is a stark reminder that Bitcoin is an incredibly scarce asset, whose maximum circulation supply is fixed at 21 mln BTC.

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Alex Dovbnya

Alex covers all things crypto — from major projects, which are fighting tooth and nail to gain the upper hand in the burgeoning industry, to the latest regulatory trends around the world. He’s a firm believer that Blockchain has the potential to reshape pretty much every business out there, and cryptocurrencies are only a stepping stone to the upcoming decentralized revolution.