The inflation fight is bad for Bitcoin in the short term
The United States Federal Reserve has been hiking interest rates in recent months, and Bitfury’s CEO believes it is suppressing Bitcoin’s price.
Bitfury CEO Brian Brooks told CNBC in a recent interview that the Federal Reserve’s inflation fight is bad for Bitcoin in the short term.’
The United States and other top economies in the world are dealing with heightened inflation as the economic impacts of Covid-19 continue to bite harder.
To fight inflation, the Fed has been hiking interest rates in recent months, and that has affected the broader financial markets, Bitcoin included. Brooks told CNBC,
“We have talked about the idea that bitcoin is an inflation hedge. The more the market expects tough policy from the Fed, the more people think the Fed is going to keep an aggressive posture, and that would tend to harm Bitcoin.”
Since the start of 2022, the United States Fed has implemented a policy of aggressive financial tightening. The Fed has increased the cost of borrowing via interest rates.
At the start of the year, the interest rates were close to zero. However, the Fed increased interest rates by 0.25% in March, another 0.50% in May, 0.75% in June and 0.75% in July. So far, the interest rates have gone up by 2.25% since the start of 2022.
This has affected the financial markets, including cryptocurrencies. The total cryptocurrency market cap has dropped from the all-time high of $3 trillion to currently stand around $1 trillion.
Bitcoin has lost more than 65% of its value over the past nine months. After reaching an all-time high of $69k in November 2021, Bitcoin is struggling to maintain its price above $20k.
Brian Brooks discussed his annoyance with how the Securities and Exchange Commission (SEC) is handling regulation in the crypto space. He said;
“Regulation does not mean suing people, and the approach the SEC has had for the last couple of years has been to not tell anybody what the rules are in advance but to sue people after they’ve launched a project, started a company, or listed a token, and then caused people to infer what the rules were later. That’s not a good thing, and so at some point, congress and the regulators need to get serious about telling people, ‘what is the speed limit on the crypto highway?’”
The US SEC has rejected numerous spot Bitcoin ETF proposals over the past few years.