New Federal Reserve Strategy Risky For Bitcoin, Bill Gates Shorts Tesla, Apecoin Hits All Time High

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Last Updated on 24 April 2022 by CryptoTips.eu

Jeroen Kok

Jeroen is one of the lead copywriters on Cryptotips.eu and discusses all recent events in the crypto market. This includes news updates, but also price analyzes and more. He developed his passion for cryptocurrency during the bull run in 2017. He has learned a lot since then. The combination of cryptocurrency and creative writing is perfect for Jeroen and an excellent way to share his knowledge with a wide audience. Find me on LinkedIn / [email protected]
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Former Chair of the Federal Reserve (he ruled it in the 1980s) Paul Volcker is credited with having staved off inflation by raising the interest rates of the United States and sending stock markets down. Volcker had been interviewed by former President Jimmy Carter for the job of Federal Reserve Chairman and was asked was he would do to fight the record inflation of the 1970s. Paul responded that he would raise interest rates aggressively and thus never expected to be nominated because of his honest answer.

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Tractors in Washington

Carter called him back the next day and Vocker did as he promised. The effects of the high interest rates on the construction, farming, and industrial sectors, culminating in indebted American farmers who ended up driving their tractors into Washington D.C. and blockading the Eccles Building. However, it also finally got inflation down. Ever since then, the Volcker theory that high inflation should be fought with high interest rates has stuck.

Forty years later and stock markets around the world are starting to realize that current Federal Reserve Chairman Jerome Powell is going to copy Volcker and will soon start raising interest rates to stave off inflation.

In response to that knowledge, tech stocks and the crypto market dipped. During a panel discussion at the IMF, Powell had this week reaffirmed the Fed’s mandate to rein in inflation at any cost and warned that aggressive rate hikes could be expected sooner rather than later. He stated:

It is appropriate in my view to be moving a little more quickly… I also think there is something to be said for front-end loading any accommodation one thinks is appropriate. I would say 50 basis points will be on the table for the May meeting.

Bill Gates shorts Tesla

Market analysts at Goldman Sachs analysts therefore believe that the Fed’s policy will have a strong effect on crypto. In a research note released on Friday, they claimed that “these assets will not be immune to macroeconomic forces, including central bank monetary tightening.”

In essence, if inflation stays at the current levels, and with the war in Ukraine prolonging and lockdowns in China unending that seems to be the case, a possibly volatile year for both tech and crypto could be in the making.

Apparently, even Bill Gates has understood this and took a massive short position on Tesla, the proponent of tech stocks as of late. Tesla CEO Elon Musk was not amused.

This comes in the same week that Netflix dropped 40% and the Nasdaq enters correction territory. Every day we see more and more warnings pop up.

ApeCoin All Time High

Meanwhile there is also some good news to report. ApeCoin, the token that runs on the Ethereum blockchain which was developed on the back of the popular Bored Ape Yacht Club, hit a new all time high this weekend. Together with Stepn which gained 40% in a week, this is yet another crypto coin that proves that it is not all doom and gloom.