Tom Lee: Lower interest rate by Federal Reserve is good for bitcoin

Tom Lee believes the recent interest rate cuts in the United States by the Federal Reserve are a blessing for bitcoin. He explains this in an interview with FOX Business on Wednesday 31 July. Lee is a co-founder of Fundstrat Global Advisors, an independent investment consultancy.

He also gives his opinion via Twitter, with uhm, a kind of technical analysis:

Bitcoin survived its first ever Fed rate cut… despite stronger USD

– hmmm, does #Bitcoin transcend fiat monetary policy?

A good sign nevertheless #BTFD#cryptowinterisover pic.twitter.com/fjTS6yTYSS

– Thomas Lee (@fundstrat) July 31, 2019

Bitcoin is increasingly becoming a hedge

As interest rates fall, it becomes cheaper to borrow money, and as a result more money can be spent. According to Lee, the interest rate cuts have a positive influence on investments in bitcoin:

Bitcoin is increasingly becoming a macro hedge for investors against things that can go wrong. Rate reductions add liquidity. And liquidity pushes money into risky assets and also hedges. This can help bitcoin.

By hedge, Tom Lee means an investment that investors can use to protect themselves against price falls. For example, gold is seen by many as a hedge against inflation (a fall in the value of money due to price increases). According to Tom Lee, bitcoin is increasingly taking on the role of hedge.

Positive about the course

In the interview, Tom Lee naturally also discussed the course of bitcoin, you can’t ignore that when you talk about bitcoin:

We have no target for bitcoin, but the earlier high point was $ 20,000. I think there is a good possibility that bitcoin will be worth so much again this year.

Tom Lee is generally bullish about the price of bitcoin. He said mid-December 2018 that bitcoin could reach a value of $ 150,000. The timing was striking, bitcoin then reached the lowest point of that year.

And of course the interview was also about Libra

Lee also briefly addressed concerns from Federal Reserve Chairman Jerome Powell about Libra, Facebook’s new stablecoin. Powell is concerned about “privacy, money laundering, consumer protection and financial stability.”

But according to Lee, these concerns do not apply to bitcoin:

Libra is very different in its architecture than bitcoin. Some comments certainly apply to libra, but not to bitcoin.