The Fed said Wednesday in a statement that it will reduce the pace of asset purchases by $15 billion a month starting this month. Purchases of U.S. Treasurys will drop to $70 billion a month from $80 billion, while purchases of government-backed mortgage securities will decline to $35 billion a month from $40 billion.
“The committee judges that similar reductions in the pace of net asset purchases will likely be appropriate each month, but it is prepared to adjust the pace of purchases if warranted by changes in the economic outlook,” the Fed’s monetary policy committee, known as the Federal Open Market Committee, or FOMC, said in the statement.
The U.S. central bank left interest rates unchanged at close to 0%, but a growing number of analysts in traditional markets are predicting the Fed might have to start hiking the benchmark rate to tamp down inflation at a time when U.S. consumer prices are rising at a clip not seen on a sustained basis in three decades.
“On one hand, tightened monetary policy may lead to less rapid growth of bitcoin demand, as many use it to hedge inflation, and less QE in theory means less inflation,” said Joe DiPasquale, CEO of the cryptocurrency hedge fund BitBull Capital. “On the other hand, the effects of the largest QE in history may lead to the largest inflation in history, regardless of the Fed attempting to scale back. If this happens, we expect demand, and prices, for bitcoin to rise to new all-time highs.“
A growing group of high-profile investors including the legendary hedge fund manager Paul Tudor Jones II and the venture capitalist Peter Thiel have joined many crypto traders in betting that bitcoin can be effective as a hedge against inflation. That’s mainly due to the limits on new supplies of bitcoin, as hard-coded into the 12-year-old blockchain’s underlying programming.
This content was originally published here.
