According to Ben Bernanke, former Federal Reserve Chairman, Bitcoin will not replace traditional payment methods in an interview with CNBC on Monday. According to Bernanke, they designed BTC to function as an alternative for fiat money, but it has failed to do so.
According to a top American economist, no one can buy groceries with BTC because it’s too pricey and cumbersome. According to Bernanke, pricing things in BTC would be a tremendous difficulty because its value fluctuates daily. The former Fed head believes that people use BTC for unlawful or illicit purchases. He does add, though, that BTC will exist provided people desire to speculate.
According to Bernanke, Bitcoin does not have any intrinsic value because it is not used in dental or any other industry. Bitcoin’s primary use, according to him, is for ransomware or something of that nature. The economist believes that there will be regulations set in place for cryptocurrencies.
The Fed Must Act Faster
The Federal Reserve’s reaction to the economic meltdown of 2007-2009 was overseen by Bernanke, who stepped down as chairman in 2014. To combat the Great Recession, he is most well-known for implementing negative interest rates and extensive easing policies.
Bernanke said experimenting with negative interest rates when the epidemic ravaged the U.S. economy in 2020, but the Federal Reserve didn’t go far. While Bernanke helped save the commercial debt market, he also rescued struggling Wall Street corporations and institutions.
In a recent interview, he blasted the Federal Reserve for taking too long to address the problem of out-of-control price increases. The central bank raised interest rates for the first time in 22 years in May, sending risk assets lower.
Bitcoin Holds as Fed Announces 22nd Rate Hike
The Federal Reserve of the United States has lifted interest rates by a 50% for the first period since May 2000. Since then, it’s gained roughly 1% and now trades at $39.141 on the Bitstamp platform. The cryptocurrency king has risen in tandem with the stock market.
The central bank’s strong economic policy aims to contain out-of-control inflation, which hit a 40-years high. There was a 25-basis-point rise in short-term interest rates by the Federal Reserve in March, but consumer prices continued to rise even as supply shortages eased. As a result of the Federal Reserve’s decision to raise interest rates, the economy is expected to cool.
The central bank’s aggressive U-turn has also dampened the bitcoin market’s momentum. This year, along with markets, the major cryptos experienced a beating. Based on interest rate futures, there is a 94% chance that the Federal Reserve will raise the standard short-term lending rate to about 2.75% by the end of 2022.
According to Powell, inflation is unacceptable and above the Federal Reserve’s target. He claims that lowering consumer prices is critical to maintaining a vibrant labor market. He predicted that there might be more shocks in store.
According to Chairman Powell, they will be discussing another 50 basis points of interest rate rises during future meetings. A 75-basis-point increase in interest rates is not being considered by the central bank right now. Powell stated that America could deal with monetary tightening.
