The Reserve Bank of Australia (RBA) declared the conclusion of its bond purchases. But it indicated that it is not in a rush to raise interest rates.
As the Reserve Bank of Australia announced the end of its quantitative easing program early Tuesday morning, the price of bitcoin stayed unchanged overnight. Fears of rate hikes subsided.
The weekly A$4 billion ($2.8 billion) government bond purchases and kept the benchmark interest rate at 0.1 percent. After a 13-year low unemployment rate and a seven-year high core inflation rate, most economists expected QE to cease.
The RBA’s plan to terminate QE comes after markets thought the U.S. would be going through a very fast rate rise. It was last Wednesday when the Federal Reserve (Fed) met. They stated that they were going to stop buying bonds in March. There will also be a rate rise in almost the same month. There will be five quarter-point rate increases by the end of the year.
Australia’s central bank did not follow the US Fed’s lead on ending QE, but the RBA did. Governor Philip Lowe said in a statement that the ceasing purchases under the bond purchase program does not imply a near-term increase in interest rates. The board is willing to be patient as it watches how the factors that cause inflation in Australia change.
There were a lot of people who thought the rate would go up in May, and then there would be four more increases by December.
Aussie dollars were hurt by the RBA’s dovish tone, which sent the AUD/USD down 50 percentage points (pips) to 0.70. This may have helped bitcoin and other risk assets keep their overnight gains.
At 04:55 UTC, the top cryptocurrency by market value was trading at $38,560. It had jumped 1.5% on Monday. Australia’s benchmark equity index, S&P ASX 200, traded 0.5 percent higher, while the futures tied to the S&P 500 futures dropped 0.2 percent.
Bitcoin’s value has almost been cut in half since it hit a high of $69,000 on Nov. 10. This is mostly because people are afraid the Fed will tighten more quickly. The cryptocurrency’s fortunes are closely tied with the equity markets, with the 60-day correlation between the two assets now at 65 percent versus virtually zero in 2017.
Institutional investors may be more sensitive to stock market gyrations and macro factors like central bank decisions, which may make them more sensitive to these things. As a side note, bitcoin has been one of the trades that make money rise in value.
The main investment idea for bitcoin, according to Fidelity Digital Assets analysts, is that it is a store of value in a digital world.
While the bears appear to be in control on a macro level, onchain activity shows that they are doing well.
According to the blockchain analytics firm Santiment, 40,785 bitcoin left exchanges last week, which was the highest number since September. Santiment said that the trend of moving coins to cold wallets is good for long-term price movements.
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