Bitcoin Jumps 7% As The Federal Reserve Announces New Stimulus Measures Supporting Economy
The Coronavirus pandemic has put the global economy on a tailspin as the U.S., Asia and pan European markets have been collapsing heavily over the last month. The Dow Jones Industrial Average itself has corrected nearly 40% over the last month.
On Monday, the Federal Reserve has announced another wave of initiative to support the crashing U.S. Economy. The Fed has said that it will keep borrowing costs low by buying unlimited amount of bonds while setting up new programs to ensure the credit flow to local and state governments.
With the Fed intervening into the corporate bonds, this becomes first-of-its-kind step by the U.S. central bank. Recently, we have seen other global central banks doing the same to ensure liquidity conditions for the company.
Considering the scale and scope of the disruptions caused by the Coronavirus outbreak, this move by Fed is to provide a cushion to businesses to get back on track and keep the employment rate in check.
George Rusnak, head of investment management at Wells Fargo Private Bank told Bloomberg: “Hopefully you’ll come out of this with some fiscal stimulus as well, and you’ll be set with good growth opportunities in the long run.”
However, Monday’s Fed move has failed to spark any rally in the traditional markets as of now. As press time, the Dow Jones Industrial Average is 3.5% or 600 points down. In an official statement by the Federal Reserve, it has said that the central bank plank plans to buy Treasuries and agency mortgage-backed securities ““in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy”.
While the traditional markets failed to reflect on the Fed news, the crypto market is showing upward movement. At press time, Bitcoin is trading 7% up going back above $6000 levels.
Almost all of the top-ten cryptocurrencies are showing around 6-7% gains on the indices. The cryptocurrency market has faced a severe beating over the last week when Bitcoin and overall cryptocurrency market plunged.
While the crypto markets were touted as an alternative to the traditional markets, they failed to capitalize in the recent global markets meltdown. With is still trading 40% lower to its 2020-high and with negative year-to-date-returns.