Bitcoin and monetary policy

Bitcoin-and-monetary-policy

Since this cycle, monetary policy has become relevant for Bitcoin. 

The peak of the shadow federal funds rate in Dec 18 has more or less marked the bottom of the bear market. 

Similarly, with it moving up sharply in Dec 21, bitcoin's bear market started.

Why were monetary conditions not as relevant before this cycle? Is it coincidental? It may well be, but I would argue this is not the case. 

We have seen more widespread adoption of Bitcoin over the last years. Futures markets being introduced, institutional interest rising etc.

So naturally, Bitcoin has become more connected to the traditional financial markets and is not only driven by retail investing anymore.

With the latest price moves, media and even the ECB have declared Bitcoin dead AGAIN. 🤨

Is Bitcoin dead?

Ask yourself this. Given that monetary cond. appear to matter, do you believe the effective federal funds rate will continue to rise indefinitely or that, ultimately, it has to come down? There you have your answer.