Investors Duck Bitcoin for Gold as Fed Announces Rate Cut

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Bitcoin slid Tuesday after the Federal Reserve’s surprise rate cut failed to impress traders worried about the economic slowdown caused by the Coronavirus epidemic.

The top cryptocurrency was wild after the Fed’s announcement. It immediately climbed from $8,745 to $8,897, raising investors’ hope for a sustainable upside above $9,000. But the price crashed almost immediately from its newfound intraday high, falling to as low as $8,635.

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BTC/USD slid despite Fed’s rate cut boost | Source: TradingView.com, Coinbase

Interestingly, bitcoin’s pump-and-dump was eerily similar to the price action in the US stock market. The shot higher as an immediate response to the Fed’s rate cut announcement but gave up gains later as the central bank’s chair explained their decision does not solve the real issue in-hand: the Coronavirus itself.

“We do recognize the rate cut won’t reduce the rate of infection,” Mr. Powell said. “The committee is closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy.”

At the same time, Gold won a jackpot during the intraday day. The yellow metal unflinchingly jumped 3.82 percent to establish an intraday high of $1,649.33 an ounce. Overall, it emerged as the safe-haven winner, beating bitcoin.

DonAlt, a prominent crypto analyst, said the rate cut didn’t simply work for the market it was supposed to safeguard, calling the downside moves “nasty.”

“Will be an interesting close today [or] open tomorrow,” he added.

Bitcoin is Still Ill

Experts believe that rate cuts and similar stimulus policies undertaken by central banks across the globe could not stop Coronavirus-led market sell-off. Fed’s move is more reassurance than cure as it tackles not a manmade economic crisis but a disease it has no control over.

That said, investors are bracing for the spreading of Coronavirus cases in the US. It could reduce their appetite for risk-on assets like stocks. Even bitcoin, which remains a controversial safe-haven asset, could offer nothing but in terms of reassurance.

The real deal in the times of pandemics is cash, medicines, and food supply. That could allow investors to shift their capital into forex and healthcare markets. Bitcoin, on the other hand, remains ill – very ill.

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