Former Treasury Secretary Wants Bitcoin to Decrease in Value

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Last Updated on October 8, 2022 by Bitfinsider

Bitcoin, the most popular cryptocurrency, has been trading in a range between $19,000 and $20,000 for much of 2018. Bitcoin’s value is currently being determined by the macroeconomic market. The sluggish movement of the Bitcoin price can be attributed to unfavorable market sentiment.

The Federal Reserve is maintaining its hawkish approach in an effort to bring inflation levels in the country under control. The Fed’s determination is being tested, however, by threats to the financial stability of the global economy. Now, former Treasury Secretary Lawrence Summers is advocating for the Federal Reserve to maintain its current hawkish monetary policy.

The price of one bitcoin is presently trading at $19,490 after seeing a loss of 2.42% over the past twenty-four hours.

Bitcoin has a high degree of correlation with the overall market as a whole. Both the S&P 500 and the NASDAQ-100 are experiencing increased levels of volatility as the Federal Reserve continues to tighten monetary policy. As a direct result of this, Bitcoin, which has a two-way correlation with the overall market, is currently seeing a significant decrease in value.

A backlash against the Federal Reserve is gaining momentum among market participants. Many banks located on Wall Street believe that the current level of inflation in the country has already reached its maximum point. Therefore, the extreme tightening that the central bank has been implementing is unnecessary. Many professionals point the finger of blame at the Federal Reserve for a possible economic downturn.

The United Nations has advised central banks around the world to stop their overly restrictive monetary policies and take a more moderate approach. In a similar vein, the World Bank forecasts that there will be a severe downturn in the state of the world economy in the year 2023.

Nevertheless, senior Fed officials seem unmoved in their aggressive approach. Neel Kashkari, the President of the Federal Reserve Bank of Minnesota, has claimed that he does not see any evidence of inflation reaching its peak. The figures on unemployment that will be released by the US Department of Labor will also provide support to the Fed’s position. Because of this, the value of bitcoin will continue to decline.

Now, the Fed is receiving support from the former secretary of the Treasury, which is quite welcome. He is of the opinion that the Fed must live up to its commitments in order to prevent inflation from becoming ingrained in society’s norms.

Summers advocates for the Fed to place a higher priority on inflation than on the stability of the banking system. He believes that the Federal Reserve will be able to combat a recession if it has successfully brought inflation under control.

However, the Fed has yet to provide details regarding the strategy it intends to use to combat stagflation.

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