Bitcoin remains a strong cryptocurrency. Central banks may only admire its use cases. For now, the U.S. government’s use of a fedcoin has minimal advantages, such as faster clearing. Yet the fedcoin will not weaken consumer interest in bitcoin.
People are inherently distrustful of a central bank digital currency, or CBDC. CBDC would let the government conduct central bank surveillance. Until trust improves, Bitcoin is here to stay. For the month, BTC-USD climbed back from a $26,000 low. It is attempting to form an uptrend.
Weak stock markets are another positive catalyst for BTC. Income investors who relied on REITs, dividend income, and blue chip stocks are losing money this year. Plus, gold, which is a hedge to currency, is flat or lower for most investors. Others who failed to realize the mega-cap seven lifted the index will now look for alternatives.
Expect higher interest rates to dampen investor demand for stocks. The more stocks weaken, the more that investors flee to safe assets. Money market funds now yield around 5.0% to 5.3%. To increase the total return, a small allocation in BTC of 5% is covered. Investors who earned 5% in interest may re-invest it in BTC. If BTC prices rise, the total return is above holding cash alone.
