Bitcoin may attract more investment from British banks and citizens following an announcement by the Bank of England that it is considering implementing a negative interest rate.
In an attempt to stimulate its economy from the adverse effects of the coronavirus and the impending Brexit event, the Bank of England hopes to encourage more spending.
Negative interest rates affect the profitability of banks, as banks are charged to store cash and, in turn, pass the costs on to depositors who have cash in bank accounts.
According to the September report of the Monetary Policy Committee (MPC), the Bank of England and the Prudential Regulation Authority will collaborate on the feasibility considerations of a negative bank rate in the fourth quarter of 2020.
The Bank of England, which is responsible for setting monetary policy to meet the government's inflation targets, currently aims to keep it at 2%. However, with the bank rate already at 0.1%, there is little room for maneuver for additional monetary policy if the UK economy is expected to continue growing.
In its August report, the MPC had discussed the effectiveness of negative rates, in light of the decline in global equilibrium interest rates for several years.
“The MPC was subsequently briefed on the Bank of England's plans to explore how a negative bank rate could be implemented effectively, should the inflation and output outlook warrant it sometime during this break-even rate period. low".
The Bitcoin community sees this as another incentive for people to embrace cryptocurrencies as a store of value, to escape the fiat currency manipulation tactics of governments.
“The Bank of England is considering implementing negative rates, soon the great money supply will have nowhere left to hide its mountains of wealth. Gold and #bitcoin stocks are going to skyrocket. "
Is Bitcoin Ready for Greater Adoption?
Bitcoin adoption has exploded in 2020 as more people consider it a better store of value compared to fiat money, especially after coronavirus tax measures cause high inflation.
However, Bitcoin has several complexities that may seem unrelated to the average investor who may opt for other SOVs such as precious metals or stocks. Furthermore, Bitcoin has spent the last six months rebounding from the March crash with repeated instances of high price swings.
However, the founder and CEO of MicroStrategy, the latest and most unlikely Bitcoin whale, Michael Saylor, says that despite its low market capitalization and volatility, Bitcoin's strong monetary policy makes it a valid hedge against Bitcoin. inflation.
"This investment reflects our belief that Bitcoin, as the most widely adopted cryptocurrency in the world, is a trusted store of value and an attractive investment asset with more potential for long-term appreciation than holding cash."