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The federal reserve indicated that American risks are faced with stagflation.
Stagflation would benefit Bitcoin, according to the manager of research in gray level Zach Pandl.
Meanwhile, markets do not seem to be all the above for stagflation at the moment.
In the last month, the great fear was that the United States could go to a recession In the middle of the president Donald TrumpPricing policy. But it can only be half of the image.
On Wednesday, the federal reserve said that the United States was likely to deal with a particularly nasty type of recession: stagflation.
“Uncertainty about economic prospects has further increased”, the Fed said After its meeting of the Federal Open Market Committee. “The committee is attentive to the risks on both sides of its double mandate and the judges according to which the risks of higher unemployment and higher inflation have increased.”
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Stagflation occurs when an economy simultaneously experiences stagnant growth, an increase in inflation and an increase in unemployment. For political decision -makers, it is equivalent to being placed between the devil and the deep blue sea. If they try to combat growth and unemployment through economic recovery programs, inflation rises. If they try to combat inflation by removing the liquidity of the economy, unemployment is getting worse.
By definition, this does not increase well for investments in traditional equity. Although it can be tempting to think that, as such, it would also be bad for Bitcoin, an analyst suggested the opposite.
“Fed is worried about stagflation. We believe that the result would be good for bitcoin, “said Grayscale Zach Pandl, research manager at the chief of the cryptocurrency, Grayscal said Wednesday.
Pandl cited a precedent note Of the company stressing that stagflation has historically favored rare products like gold.
“Bitcoin was not there for past stagflations, but can be considered a rare digital goods and is increasingly considered as a modern value store,” he wrote on April 9.
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Pandl added that his confidence that Bitcoin could perform as gold in such a result was also reinforced by the recent support of the US active government. As the analyst pointed out, the American secretary to the Treasury Scott Bessent recently said“Bitcoin becomes a value store” in the midst of government efforts to constitute a strategic reserve.
