The United States Federal Reserve has been raising interest rates in recent months, and the CEO of Bitfury believes it is pushing the price of bitcoin down.
Bitfury CEO Brian Brooks told CNBC In a recent interview that the Federal Reserve’s inflation fight is bad for bitcoin in the short term.’
The United States and other top economies in the world are dealing with increased inflation as the economic effects of COVID-19 get tougher.
To fight inflation, the Fed has been raising interest rates in recent months, and this has affected the broader financial markets, including bitcoin. Brooks told CNBC,
“We’ve talked about the idea that bitcoin is an inflation hedge. The more the market expects stricter policy from the Fed, the more people think the Fed is going to maintain an aggressive currency, and that will make bitcoin more vulnerable. There will be loss.
Since the start of 2022, the United States Fed has implemented a policy of aggressive fiscal tightening. The Fed has increased the cost of borrowing through interest rates.
At the beginning of the year, interest rates were close to zero. However, the Fed raised interest rates by 0.25% in March, 0.50% in May, 0.75% in June and 0.75% in July. Since the beginning of 2022, interest rates have increased by 2.25%.
This has affected financial markets including cryptocurrencies. The total cryptocurrency market cap has fallen from an all-time high of $3 trillion to nearly $1 trillion currently.
Bitcoin has lost over 65% of its value in the past nine months. After reaching an all-time high of $69k in November 2021, Bitcoin is struggling to maintain its price above $20k.
Brian Brooks discusses his annoyance with how the Securities and Exchange Commission (SEC) is handling regulation in the crypto space. he said;
“Regulation is not meant to sue people, and the SEC’s approach for the past few years is not to tell anyone what the rules are already, but after suing people they started a project, started a company… is, or listed a token, and then lead people to guess what the rules were later. requires, ‘What is the speed limit on the crypto highway?'”
The US SEC has rejected several spot bitcoin ETF proposals over the years.