- A Deutsche Bank executive has cited central bank rates and Facebook’s Libra token for the bitcoin spike
- The US Federal Reserve has stated that they are considering cutting interest rates
The cryptocurrency industry is currently in a new phase of maturity as it is receiving much more institutional attention from firms such as JPMorgan and Facebook and it has also been more heavily discussed on the world stage when it comes to economic policy. There are a number of factors that have contributed to the rise of bitcoin and other cryptocurrencies such as the lack of faith in traditional financial systems, their ease-of-use and so on. However, according to Jim Reid, a Deutsche Bank executive, the interest rate decisions being made by central banks around the world can be pointed to as one of the chief reasons for the recent turbulence in bitcoin’s price.
Bitcoin price will likely keep going up
These statements were made during an interview with CNBC on June 26, 2019, and Reid, who is the head of global fundamental credit strategy at Deutsche Bank, said that central banks have played a part in the rise of Bitcoin:
“If central banks are gonna be this aggressive, then alternative currencies do start to become a bit more attractive.”
An example of an aggressive strategy by central banks is the potential interest rate cuts that are being looked into by the United States. Reid also made a reference to a speech by Jerome Powell, who is the chairman of the Federal Reserve, in which he said that the US is considering a cut of interest rates due to current economic uncertainty. This is interesting as cryptocurrencies have seen increased growth in countries such as Venezuela that have experienced mass inflation and recently, the US dollar has dropped in comparison to major fiat currencies.
Deutsche bank blames interest rates – and also Facebook
Besides the decisions being made by central banks, Reid also pointed to an increase in crypto prices being attributable to Facebook’s recent foray into the crypto world through their Libra token, for which the whitepaper was released this month.
He also reiterated his previous views which criticized easing practices being adopted by central banks and also stated that the current fiat currency system is not sustainable on the long term and will soon come to an inevitable end.