Bitcoin's future connects to the Federal Reserve's "Third Mandate" policy, according to Arthur Hayes.
In the realm of finance, two significant developments are catching the attention of market watchers: the potential implementation of Yield Curve Control (YCC) by the Federal Reserve and the rising momentum of Bitcoin.
Yield curve control, a more aggressive form of monetary policy than traditional rate cuts, involves the Federal Reserve setting explicit targets for long-term interest rates. This approach could generate substantially more liquidity than previous quantitative easing programs. The ongoing anticipation of Fed rate cuts, as indicated by the CME FedWatch tool assigning a 96% probability of a 25 basis-point rate cut, suggests that market consensus is leaning towards loosening monetary policy.
Meanwhile, Bitcoin has maintained a robust position, with its value surpassing $117,000. The digital currency has shown impressive gains, recording a 5.9% increase over the past two weeks. This bullish trend has been further supported by the minting of $1 billion USDT by Tether, a stablecoin closely tied to the value of the US dollar, and the accumulation of 5,817 Bitcoin (worth $680 million) by a newly created whale wallet.
The accumulation by these whale wallets and the declining exchange reserves suggest that institutional positioning is already underway. This institutional-level interest, rather than retail investment, is evident in the newly created wallet accumulating such a significant amount of Bitcoin.
The macro environment, with U.S. fiscal expansion and growing institutional interest in cryptocurrency, creates a landscape that could support an optimistic outlook for Bitcoin. Stephen Miran, a pro-crypto economic expert recently sworn in as a Federal Reserve governor, appointed by Donald Trump, is playing a significant role in U.S. monetary policy decisions relevant to Bitcoin. Miran has expressed positive comments about Bitcoin in the past and, with his recent confirmation by a narrow 48-47 Senate vote, is poised to advocate for aggressive interest rate cuts that could favor the crypto market's growth.
Former BitMEX CEO Arthur Hayes has gone a step further, predicting that Bitcoin will reach $1 million. Hayes also suggests that mounting pressures in the financial system may force the Fed to implement Yield Curve Control (YCC), driving Bitcoin to previously unimaginable price levels.
As market participants closely watch for signs of Fed policy shifts that could trigger the next major move in cryptocurrency markets, risk assets including stocks, Bitcoin, and gold could respond with major price increases. The interplay between monetary policy, institutional interest, and the potential implementation of YCC makes for an intriguing and potentially profitable landscape for Bitcoin investors.
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