The European Central Bank has just made a huge move to bring more hope into the Eurozone economy by announcing a cut of its deposit rate by 0.1pc, making crypto enthusiasts opine that the move unleashes more reasons to invest in Bitcoin.
Amid the ongoing uncertain Brexit, the central bank for Euro declared that it would cut its deposit rate by 10 basis points to -0.5% as thought, with expectation that the interest rate will remain the same or move down till targeted inflation surfaces within the projection horizon.
President Mario Draghi made the declaration adding that the bank will also re-initiate a quantitative easing program which involves indefinite purchase of 20bn euros debt a month “as long as necessary,”
Reason for Deposit Cut Rate Decision
The slow growth of the Eurozone economy surrounded by incessantly low inflation and the ongoing U.S.-China trade war has so far been an obstacle for Draghi’s tenure.
At the moment, the Euro currency records 1pc inflation rate. It is behind the CPI rate in the UK and the US, and far below the ECB’s target rate.
The moribund growth of the economy birthed Draghi decision to give in all it takes in driving the economy towards the coast with increased inflation.
Nevertheless, President Donald Trump stated that the bank’s decision will enhance the depreciation of Euro against the tagged “VERY strong Dollar.”
More Reasons to Buy Bitcoin
Shortly after the central bank’s announcement, the Euro nosedived to below $1.10 with -0.5% value change in the last 24 hours, registering notable weakness against the US Dollar. Contrarily, Gold and Bitcoin has after the decision drifted towards the ceiling.
Aside ECB, there have also been reports that the Turkish Central Bank might also be on the verge of initiating its own cut rate.
While the ECB’s decision signals that the Eurozone would be faced with more debt and inflation, observers subsequently addressed the situation as a blessing in disguise for Bitcoin.
They claimed that it is revealing the inefficiencies in Euro fiat currency, adding that Bitcoin is decentralized and does not need to be inflated by anybody for growth.
At press time, a unit of Bitcoin is worth $10,340 with 3.34% added value ($325) in the last 24 hours. Earlier before the announcement of the ECB’s decision, the cryptocurrency went down to as low as reaching 5 digit value before rallying up back above $10K.
Cryptocurrency Not A Threat To Financial Stability in the Euro Zone –ECB
Previously, the European Central Bank (ECB) averred that cryptocurrencies are no threat to financial stability in the euro zone.
In its paper, the ECB said the combined value of crypto-assets is small relative to the financial system, and “linkages” to the financial sector are still limited. Further, banks in the EU do not appear to have “systemically relevant” holdings of crypto-assets.
“The high price volatility of crypto-assets, the absence of central bank backing and the limited acceptance among merchants prevent crypto-assets from being currently used as substitutes for cash and deposits, as well as making it very difficult for crypto-assets to fulfill the characteristics of a monetary asset in the near future.”
Similarly, Euro area holders of crypto-assets in Q3 2018 were mainly found in the household sector with key markets in Belgium, Italy, and Germany.