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The effect of lowering the key interest rate in the USA on the Bitcoin rate

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Recently, the US Federal Reserve System (FRS) for the first time since the financial crisis of 2008 and for the first time in the history of bitcoin lowered its base interest rate by 25 points – from 2.25–2.5% to 2–2.25%.

At first glance, it may seem strange and far-fetched to analyze the effect of lowering rates on bitcoin . It would seem, how can this affect bitcoin, which was created as a response to the imperfection of the policies of central banks and the global financial system as a whole? Moreover, digital gold is almost not correlated with traditional financial assets, therefore, how can the US monetary regulator influence it?

However, empirical evidence suggests that after the Fed’s decision, the price of BTC went up sharply, accelerating after the news of new duties for Chinese goods worth $ 300 billion. Traditionally protective assets such as gold, the Japanese yen and the Swiss franc rose almost simultaneously with bitcoin. and 10-year US treasury bonds. Against this background, more risky assets fell – the Chinese yuan, the Dow Jones Industrial Average, NASDAQ 100, FTSE China A50, WTI crude oil, and the Russian ruble. Thus, many market participants have opted for a “safe haven" instead of risky financial instruments.

A number of reasonable questions arise:

We offer our readers their views on the current state of things.

What gives a reduction in the Fed base rate?

Changing the value of the Fed base rate is an important component of monetary policy. Thus, rate cuts are usually part of a stimulating (soft) policy aimed at expanding credit expansion or, in fact, the money supply.

Soft monetary policy is designed to revive business activity, but it exerts devaluation pressure on the currency, stimulating exports. We emphasize that according to the Fed’s press release , the main macro indicators – inflation, unemployment, household consumption and investment – are normal, which means that there was no special need to lower the rate.

Thus, the recent Fed decision was dictated, apparently, by the desire to make American exports more competitive in the context of a trade war with China. The completion of the latter can hardly be expected in the near future, which is confirmed by the introduction of new duties on China almost immediately after the meeting of the Federal Committee on Open Market Operations.

The response of the Celestial Empire was not long in coming – after the announcement of new duties, the People’s Bank of China allowed the renminbi to fall to 11 years ago.

Obviously, the devaluation of the renminbi is designed to partially offset the losses of Chinese exporters. However, most likely, such a measure will lead to an even greater escalation of the trade war.

Why would this only aggravate the trade war and push the global economy into recession?

By sacrificing some weakening dollar, in the short term the USA can make its goods more attractive at a price in the world market. At the same time, imports from other countries to America will become more expensive, because to buy goods, for example, from Mexico or China, you will need to convert more dollars to pesos and yuan, respectively. Consequently, the US trade deficit may decrease.

The image below shows that the problem of the trade deficit has been relevant for the United States for more than a dozen years and over time the situation only worsens:

The rate cut seems to be clearly a political decision on the eve of the 2020 presidential election, as it can give a fairly quick and tangible effect to the US economy. Thus, the “cheap money” policy stimulates export and business activity within the country. In addition, the increase in protectionist barriers that followed the rate cut may initially help improve employment rates.

However, as history shows, in spite of a possible improvement in the situation on the labor market and a reduction in the trade deficit in the short term, protectionism does more harm than good in a longer period.

In particular, consumers have to buy goods more expensive, often of poor quality, but from a local manufacturer. In various areas, monopolies can arise, which often cause inflation and the preservation of technological backwardness due to a decrease in incentives to introduce innovations, as well as the need to compete in the international arena.

Exports of countries overly concerned with national producers are declining. This leads to a drop in foreign exchange earnings, which puts pressure on the national currency. In addition, exported goods include imported components, therefore, tariffs lead to higher costs for producers, higher prices and lower competitiveness of products at the global level. As a result, indicators of employment and growth in national production are declining, and a recession is beginning.

All this in aggregate negatively affects international cooperation and specialization, slows down the growth of the world economy, limits competition and suppresses scientific and technological progress.

However, some expected results of protectionism in the medium and long term are already evident. So, the chart below shows that global trade has been declining for three consecutive quarters:

Also note that on August 5, shortly after the news of the introduction of duties for Chinese goods, US indices fell another 3%:

Among other things, a decrease in the base rate could lead to a chain reaction – it is possible that the central banks of other countries who do not want to lose in international trade will soon follow the example of the Fed.

As a result, a devaluation fashion can lead to a global increase in protectionism. The latter creates barriers to international trade, because it contradicts the theory of comparative advantages and the laissez-faire principle, suggesting a less efficient distribution of limited resources and an increasing role of the state in the economy.

How will easing the Fed's monetary policy affect the price of bitcoin?

Many analysts are sure that in conditions of low profitability of traditional financial instruments, gradual devaluation of currencies and increasing global uncertainty, bitcoin looks like an alternative that is not inferior in attractiveness to gold and other protective assets.

Thus, Delphi Digital researchers are convinced that the “ideal storm” is brewing in the global economy, which contributes to a steady increase in demand for BTC.

“The first and perhaps most important: global central banks have dramatically changed their mood towards a softer monetary policy. The Fed, the ECB, the Bank of Japan, the People’s Bank of China and many others are now preparing market participants for further cuts in rates and additional incentive measures , ”analysts say.

The report also says that soft monetary policy entails a growing risk of devaluation of national currencies, which is a long-term factor in increasing demand for bitcoin and physical gold. Comparing these two assets, experts find BTC even more attractive, given "emergency measures in monetary policy and increasing geopolitical tensions."

Delphi Digital does not rule out the possibility that over time, having “sovereign properties”, bitcoin will surpass gold in terms of capitalization. In other words, the BTC market could one day exceed $ 7 trillion.

Alan Silbert, Managing Director of the INX security platform, shares the opinion of Delphi Digital:

“The interest rate has fallen, and new declines are already on the verge. The lower the rate, the less reason to keep the dollar. "

“Against the backdrop of global instability, bitcoin behaves as intended,” Anthony Pompliano, co-founder of the Morgan Creek Digital crypto fund, shares his observations.

The fact that in the current situation Bitcoin is an excellent hedging asset , the head of the research department of Bitwise Investment Matt Hogan has no doubt:

“As a hedging instrument against rampant fiscal and monetary policies, bitcoin has become a kind of dominant paradigm.”

Like other market analysts, bitcoin traders will closely monitor the Fed and its statements about future changes in monetary policy, Hogan is sure.

“The continuation of a stimulating monetary policy will be a powerful positive factor for the price of bitcoin. Assets such as bitcoin and gold that are not profitable will become more attractive as interest rates go down, ”the analyst said.

Hogan also has no doubt that in anticipation of the election, Donald Trump “will continue to look for ways to further devalue the dollar as a way to stimulate the economy.”

The former chief strategist of the Donald Trump administration, the well-known conservative Stephen Bannon , expressed a consonant opinion – according to him, the current geopolitical situation contributes to the development and mass adoption of cryptocurrencies .

“I think cryptocurrencies have a great future, especially in the context of today's global populist uprising ,” he said.

Like many experts, Bannon is convinced that the US-China trade war significantly affects many aspects of the global economy and geopolitics.

Circle head Jeremy Allair is confident that investors are increasingly inclined to view cryptocurrency as a safe asset in times of stock market crash:

“Mankind has created an sovereign, secure value storage mechanism that can exist wherever the Internet exists. He is not susceptible to censorship or forfeiture. ”

Alair believes that recent developments in world politics and economics make Bitcoin a “truly attractive asset”:

“The growth of nationalist sentiments, currency and trade wars – all this really positively affects bitcoin”

Circle head added that despite government restrictions, cryptocurrencies are still actively traded in China through offshore platforms. He also expressed confidence that many investors affected by cryptozyme will subsequently return to the market.

Confident in the growth of bitcoin against the backdrop of global instability and Mike Novograts.

The above arguments of analysts are not without common sense, because it is proved that diversification of portfolios through bitcoin can significantly increase their profitability in the medium and long term.

In particular, Raul Pal, the ex-Goldman Sachs manager and founder of Global Macro Investors, is convinced that the potential benefits of investing in BTC far outweighs all possible risks. He is also sure that the first cryptocurrency should be in the portfolio, even if the probability of new "X" is only 1%.

Bitcoin is favorably distinguished from fiat currencies by the predicted issue and a strictly limited offer. So, more than 80% of digital gold has already been mined, while several million coins are simply lost and, therefore, the supply on the market will never reach 21 million BTC.

In addition, the third halving expected in May 2020 will lead to a halving of the reward for the block mined by miners. This will reduce the volume of regular emissions and, thus, make the first cryptocurrency even more scarce. Growing demand with an almost constant supply of the asset, as you know, pushes the price up.

findings

Stimulating monetary policy has two sides to the coin: contributing to the revival of exports, business activity and improving the trade balance, it leads to a weakening of the monetary unit, making imports more expensive. It can also provoke similar measures by central banks of other countries. This leads to trade and currency wars, as can be seen in the difficult relationship between the United States and China.

The Fed’s decision to cut rates is likely to be purely political, given the almost new duties that followed on Chinese products. It is unlikely that the trade war will end soon – retaliatory measures by China may force the Fed to continue easing monetary policy. In general, such actions are unlikely to contribute to the resolution of global problems and the growth of world trade, which, in particular, can be seen from the reaction of financial markets.

Many experts agree that low interest rates encourage consumption and investment, but by no means savings. In such an environment, the yield on traditional financial instruments may not cover inflation, the Fed’s target of 2%.

The soft monetary policy of central banks and the global instability exacerbated by the trade war can positively affect the Bitcoin exchange rate. The latter is characterized by a deficit nature, complete independence from central banks and non-correlation with traditional assets. This makes digital gold not only a potentially super-profitable investment, but also an excellent tool for portfolio diversification.

Therefore, even the most ossified traditional investors can pay attention to bitcoin. The price of the latter is entirely determined by aggregate demand, and not by the policy of central banks. This means that, most likely, BTC will grow in the future, as it is massively accepted and the crypto industry develops.

Publication date 08/07/2019
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TRON (TRX) cryptocurrency review – forecasts and prospects, current rate

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Cryptocurrency TRON (TRX) is a decentralized protocol based on blockchain technology designed to create a global entertainment network with free content.

In simple terms, TRON is a service similar to all well-known social networks and platforms where users have the opportunity to publish, view and use any available content for entertainment, for example, online games.

The TRON project is currently developing the idea of joint consumption, which is that on a single global platform, users will be able to share entertainment content.

Official TRON cryptocurrency website: https://tron.network

Analysts call this platform the broadcast of the modern entertainment industry. In general, the functioning of this system is as follows:

  1. The author or copyright holder publishes the result of his intellectual work on the official website. You can download anything from literary novels to an author’s song or art on a specific topic. Next, the participant uploads information about how his creation can be used (as an accompaniment to another work or as an independent product). Nearby, he indicates the price of his work.
  2. Another user who is interested in this work acquires it for the local currency Tron (TRX). However, users should remember that it is impossible to purchase this or that product on this resource using fiat money (dollar, euro, rubles, etc.). The system has its own cryptocurrency , which must be purchased at exchangers or exchanges in order to complete a transaction.
  3. As soon as the interested user has acquired the result of intellectual work, the amount indicated by him is transferred to the author’s account. The author can use the tokens at his discretion – purchase a work from another author, simply save money in his account, or exchange it for another cryptocurrency or fiat funds.

About what TRX is, initially interested in all users who are just starting their activities on the site. This resource uses several types of tokens for different purposes:

  • Tron (TRX) . This is the main currency of the system. For this currency you can buy or sell the results of your intellectual work. If necessary, the owner of a certain amount in this currency can exchange it for fiat money or other cryptocurrency.
  • Tron Power It is impossible to purchase or exchange other money for a given currency. The only way to get them is to secure the TRX currency on the site platform. In this case, they are converted to TR. The presence of such tokens gives advantages to their owner. For example, the holder of a TR has the right to vote for one or another change in the system, or to oppose them.
  • TRON 20 . Coins owned by developers. With the help of them, they create new full-fledged blockchains with new tokens.

The TRON cryptocurrency issue is limited, 100 billion coins have been issued at present. However, it is worth considering another point – starting in 2018, tokens begin to be burned (they are meant to be forwarded to an address known only to developers). The last major burn was in June last year, but how often such procedures will be carried out is currently unknown.

project team

The team of this project has on its side professionals working in various fields. The founder of the platform and the creator of TRX Coin is Justin Sun , who also created a social network with an audience of 10 million people. In 2017, Forbes magazine included Justin on his list as one of the most successful entrepreneurs, who was not yet 30 years old.

The technical director of the project is Lucien Chen , who has extensive experience in working for large Internet companies. He is perfectly versed in blockchains and the principles of functioning of cryptocurrencies.

Deus Yu , responsible for quality control, has been working in the computer games industry for a long time. According to Justin Sun, the experience of Deus will come in handy a little later, when the platform gains even greater popularity.

Charles Zhang , an adviser who is well versed in a business not related to cryptocurrencies and blockchains. He has repeatedly lectured on the basics of entrepreneurship, with which he was invited to many universities. Charles made a huge contribution to the promotion of the platform at the initial stage.

Blockchain Browser

Block Explorer is a search tool that allows you to view the addresses of wallets involved in the system, blocks, as well as data of transactions completed or committed. It can be compared with standard browsers, with the help of which an ordinary user searches for the information he needs on the Internet.

For each cryptocurrency, a personal Block Explorer is created that shows the network status for a given period of time. For the Tron cryptocurrency, such a Block Explorer is called TRONSCAN , where users can get all the information they need ( https://tronscan.org ).

How to mine Tron?

The developers of the platform did not provide for mining the Tron cryptocurrency , since they had already created all the necessary coins. In addition, the creators talked about the scheme according to which their cryptocurrency will work:

  1. 40% of the total number of coins will go on sale to enable the project to develop further.
  2. 15% of the remaining amount is allocated for acquisition by investors. Investors are players who, after the main sale of coins, will be ready to purchase tokens further.
  3. The remaining funds are “frozen” and remain in the accounts of the company owners.

Justin Sun explained that perhaps mining will be provided in the future when the company gains the necessary popularity.

TRX Token Wallets

The user can choose one of two options for storing Tron coins (TRX):

  • Storage of tokens on the exchange;
  • Creating your own crypto wallet.

With proper use, wallets provide a higher level of security. All types of wallets for Tron (TRX) are described in detail in this review .

Buying and selling TRX coins

You can buy a Tron on popular crypto exchanges , we recommend that you use the first 15 exchanges, and do not forget to install additional account protection. On the selected exchange, you must go through the registration procedure, after which you will be given a personal wallet, as well as its address.

The most popular and safe exchangers where you can buy and sell Tron:

The exchange rate of the Tron cryptocurrency against the ruble as of October 28, 2019 is 1.29 rubles per 1 coin. For a detailed analysis of the course and chart of coins, we recommend that you look at the Coinmarketcap website.

Development Perspectives and Company Roadmap

A distinctive feature of the project is its roadmap, which is scheduled until 2027. It is divided into several stages:

  1. Exodus It lasts from 2017 to 2018 and is considered officially completed. During this period, information about the project was actively disseminated, as well as developers were engaged in improving tools for using the site.
  2. Odyssey . Accounted for 2019-2020. During this time, developers will pay special attention to the economic development of the platform.
  3. Great Voyage . Captures July 2020 and ends in July 2021. Implementation of a personal ICO system, and third-party developers will have the opportunity to launch their own ICOs.
  4. Apollo It lasts from March 2021 to March 2023. Creating a decentralized exchange platform.
  5. Star Trek . It begins in April 2023 and ends in September 2025. Creation of a decentralized platform for the development of any computer games.
  6. Eternity . It starts in September 2025 and ends in September 2027. Platform users will have the opportunity to create their own playgrounds.

The developers mentioned that if these plans are implemented, a new roadmap will be created in the future, which will begin in 2028.

When analyzing the active nodes of the Tron cryptocurrency, you can notice the scale of the development of the project, where the majority of servers are located in the USA, China and Germany.

The forecast for Tron cryptocurrency from leading analysts suggests that, taking into account the current features of the crypto asset, in the future the project can absorb the entertainment market. And this means that in 2020 the value of one coin is able to stand on one level with the dollar.

Main competitors Tron

The project has two main competitors – Qtum and Ethereum . Each competing company has its own advantages, for example, the first has a more advanced platform in terms of technology, and the second wins due to smart contracts and fame.

Analysts are confident that the Tron platform will still have to fight for its users, since the developers are aimed at a specific audience. However, the Throne does not have special advantages that would distinguish the project from its competitors, which could become a serious problem in the future.

Conclusion

Tronix cryptocurrency has good prospects for further development, since the project itself is one of the most ambitious among others. However, at present it is not in demand. Investing in such a project will bring quite large risks, however, long-term investments can bring the investor good profit.

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The largest exchange Binance has the opportunity to deposit / withdraw deposits in rubles

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The Binance cryptocurrency exchange this Wednesday activated the possibility of making deposits in Russian rubles.

According to the instructions provided on the website, deposit / withdrawal of funds is carried out through the AdvCash payment system , including using bank cards. The commission for the deposit in this case is 3%, for the withdrawal – 2.5% plus 50 rubles.

To deposit / withdraw assets in rubles, you need to go to the “Buy cryptocurrencies” tab in the upper control panel or select the “RUB” currency in the user's wallet, then indicate the desired direction of payment and other necessary data.

Trading pairs for exchanging the ruble for cryptocurrencies on the Binance platform have not yet been presented.

Earlier today, CoinDesk published excerpts from a conversation with Binance CEO Changpen Zhao during his visit to Moscow last week.

“We are always looking for partners in any community, especially in Russia. Russia is a key market for us, it is one of the most active markets in the global blockchain space, ” he said then.

Zhao also confirmed that Russia is included in the Venus project, in which Binance intends to launch several regional stablecoins.

“We are working with potential issuers of stablecoin tied to fiat currency. We do this in all jurisdictions, in Russia in particular, we are looking for partners, ” he added.

Last week, Binance listed its first cryptocurrency pairs on its main platform, starting with Nigerian naira. The exchange also supports fiat trading at selected sites in Uganda, Singapore, the United States and Jersey.

Publication date 10/30/2019
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Technical analysis: the cryptocurrency market is ready for a new growth wave

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RoboForex lead analyst Dmitry Gurkovsky talks about further possible scenarios of the price movement of bitcoin and several popular altcoins .

Buyers managed to show a good bounce up. At the moment, assets such as Bitcoin and Bitcoin Cash look very interesting in the context of continued growth. Moreover, if the BCH / USD chart shows the formation of a reversal pattern of the inverted “Head and Shoulders” in favor of growth, then BTC is just getting ready to leave the channel and continue a confident upward movement.

Unfortunately, the assets of Ethereum, Litecoin and EOS are still under pressure. There are several signals from daily charts in favor of moving down. However, if the bulls manage to break through the next resistance levels, then these assets will be ready to move to the phase of sustainable growth.

In general, the cryptocurrency market looks ready for the start of a new wave of recovery. The bulls can only hold the current levels and rise a little higher to deprive the bears of all chances to continue the downward correction.

Bitcoin (BTC)

Quotes showed an aggressive rebound from the support level. However, the price tested resistance in the form of a downtrend near the $ 9800 area. To continue the rise by the buyer, it is important to “push” prices even higher.

A good signal in favor of a likely continuation of growth is the breakdown of a downward trend line on the RSI indicator. In most cases, a return to the broken line occurs, after which we should expect continued growth. As the main trading idea, you can take a slight correction to the level of $ 7700, after which you can talk about a rebound and upward movement.

Cancellation of this option will be a fall in the quotes of the digital asset below the level of $ 6875, which will indicate a breakdown of the lower boundary of the channel and continued decline.

On the 4-hour chart, cryptocurrency quotes were able to leave the limits of the short-term downward channel. Such a signal is the first sign of a potential reversal of the current downward correction. However, confirmation of the completion of the fall will be a strong growth with consolidation above the level of $ 10,995, which will indicate a way out of the downward channel. In this case, the target of the movement will be the area of $ 12,405.

The values of the RSI indicator again pushed off the resistance level, so we should expect a decrease and a test of the broken channel boundary. After this movement, we can talk about the beginning of growth towards the goal at the level of $ 10,995.

Ethereum (ETH)

Ethereum buyers also managed to keep quotes in the support area, which is located at $ 147. At the moment, the price has once again returned to the area between the moving averages, which may provoke an attempt to further decline.

In favor of this option is a rebound from the downward resistance line on the RSI indicator. As the main idea, we should expect a rebound from the lower border of the rising channel and the continuation of the fall to the first target at $ 147. Its breakdown will open the way for the movement of quotations to the level of $ 100. Cancellation of the negative option will be a breakdown of the Moving Averages and the consolidation of ETH / USD above the level of $ 239. In this case, we can talk about continuing the rise to the goal at the level of $ 280.

On a 4-hour chart, quotes are clamped in a downward channel. The values of the RSI indicator are testing the resistance line again, so we can expect a rebound and fall in the quotes of the digital asset to the level of $ 150.

In favor of this option, a test of the upper boundary of the downward channel will also come forward. Cancellation of the proposed forecast will be a breakdown of the resistance level and consolidation above $ 202, which will indicate the exit of quotes beyond the rising channel. In this case, the target of the rise will be the level of $ 239.

Attention!

Forecasts of financial markets are the private opinion of their authors. Current analysis is not a guide to trade. RoboForex is not responsible for the results of work that may arise when using trading recommendations from the submitted reviews.

Publication date 10/30/2019
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Name Price24H (%)
Bitcoin (BTC)
$8,654.71
-7.24%
Ethereum (ETH)
$215.31
-12.99%
XRP (XRP)
$0.229754
-9.63%
Bitcoin Cash (BCH)
$311.64
-11.79%
EOS (EOS)
$3.44
-15.31%
Stellar (XLM)
$0.057157
-10.53%
Litecoin (LTC)
$58.61
-17.19%
Cardano (ADA)
$0.048719
-13.19%
Tether (USDT)
$1.00
-0.19%
Monero (XMR)
$67.94
-11.95%
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