The Impending Global Negative Interest Rate Regime Bodes Well for Bitcoin

Image credit: historyofbitcoin.org


The widely-publicized Bitfinex heist, which is the second biggest Bitcoin exchange hack after MtGox in 2013, may have a short term negative impact on the way general public perceives the novel technology. However, the Bitcoin blockchain - the backbone of the digital currency - was never compromised and the network continues to function without a hitch. The same could not be said for the world’s financial system!

Big brokerage houses like Interactive Brokers have already begun implementing negative interest rates on clients holding EUR, CHF and SEK balances. And negative interest rates have also begun to creep into corporate banking as well. Today, Royal Bank of Scotland announced that starting Monday, corporate clients such as fund managers and pension funds will be charged for holding cash in certain foreign currencies, including the euro. According to a Daily Mail report, RBS stated that negative interest rates may also be applied to small business; that is if the Bank of England decides to cut interest rates into negative territory to stimulate the sagging British economy.

Most of Europe and Japan are already in a negative interest rate regime, with the US and UK very likely to follow suit in the coming months. Consumers have so far been spared the direct sting of negative interest rate as banks have tried to absorb some of the cost by increasing fees on some services, but as the RBS has already demonstrated today, this will not be the case for much longer:
“Until now RBS has absorbed these costs and imposed a zero per cent minimum on deposit rates. But it said this was no longer sustainable.”
It is precisely at this point that digital assets and currencies like Bitcoin will begin to gain serious traction with small businesses and consumers. Bitcoin has a fixed supply and can’t be inflated away at the stroke of a pen. The coming global negative interest rate environment bodes very well for the future of Bitcoin and digital assets outside the legacy financial system.



Bitcoin Price Analysis:

Bitcoin took a big hit in the aftermath of the Bitfinex hack, where close to 1% of all Bitcoin in existence were stolen, but the digital currency has stabilized over the past two weeks. The Bitcoin exchange rate has been hovering around $580 for the past two weeks. In fact, the $580 level has been used as support about three times in August, and once as resistance on the 16th.



Bitcoin broke above $580 today and this pivot zone may start to now act as support and prop-up the market. It seems that another rally towards $600 may materialize over the next few days.

In case $580 doesn’t hold as support and price breaks south again, the $565 area may come into play as support due to its prior history.

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3 comments :

  1. I agree. Negative interest will make bitcoin more atractive, ive heard some banks have already started charging customers for holding their cash, yet one has to account for bitcoins volatility. In one hand you save costs & fees, in the other you dont now what 1 btc will be worth tomorrow between (0 - infinite).
    Gridcoin adress: SGQAo5UM1ASwg9g4DCC929pNZXN9trt46P

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  2. All across the world more and more people are now using crypto currencies, in the main BTC as a 'hedge' against deflation, devaluation and negative interest rates. We are into another 'bubble' as economies stagnate and countries even start to envisage using 'helicopter money' to boost economic growth as 'QE' doesn't seem to be doing the job. The man in the street, those who do understand, watch as the worlds economic system thrashes about trying to find a solution to the tide of bad economic forecasts. The banks avarice was their downfall and unfortunately we're along for the inevitable ride.

    S2e1YmSWRo1p5faz1GDUTokE3qTYvEPA9z

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  3. Negative interest are just another way of saying: we got too much printed money we don't need & need to put more money into the market, not keeping it in the socks.
    So expect a market fall soon! ;)
    S7Bs648NrsLFwCk1QHTE2cJKkuN46Gbk6M

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