In an attempt to calm people amidst the disruptive stock market collapse, President Neel Kashkari of the Federal Reserve Bank of Minneapolis confidently said that the Fed has cash of “infinite” amount. During his appearance on 60 Minutes, Kashkari emphasized that there is nothing to worry about as they will do everything they can to ensure there’s enough money in the financial system. His interview suggests that the Fed can print money as long as need, instantly creating a buzz within the crypto industry.
It’s worth noting that following the announcement of the Fed’s open-ended asset purchases and its other programs that are meant to combat economic downfall, the gold and crypto market both exhibited a remarkable performance. As of press time, gold is up by 4%, and Bitcoin (BTC) is up by 8%. However, it appears that the move of the US central bank, despite involving trillions of dollars, is not enough, as the S&P 500’s continue to exhibit significant drops. According to reports, the S&P 500’s level hits the recorded figure in 2016, taking four years of gain out of the picture.
Crypto analysts had been quick to assess the situation. Notably, the Fed’s plan of printing money whose value is not pegged to gold or any other asset would likely result in abuse and more problems in the future, such as inflation rate. The governments need desperate measures, and they think unlimited money printing would solve the problem. However, according to INX managing director Alan Silbert, once the dust settles of outright panic, margin calls, and liquidations, Bitcoin will exhibit its strength against unprecedented fiat printing.
Quantum Economics’ founder, Mati Greenspan, was quick to support Silbert’s argument. He said that the Fed’s decision reflects the basic reason why Bitcoin was created, to counter the notion that fiat creation can be limitless. As many might have known, Bitcoin’s supply is limited to 21 million.
Erik Voorhees, the CEO of Shapeshift, said that the Fed’s plan didn’t come as a surprise for him at all. Notably, central banks have been printing fiat at an unprecedented rate, the very reason why its value drops every year until it is lost forever.
While it remains to be seen how the Fed’s plan would impact inflation rates in the coming days, one thing becomes clear. Investors, in this time of crisis, are looking to alternative assets such as gold and cryptocurrencies to save themselves.