Bank of Canada maintains its policy rate. Will Jerome Powell follow suit? And, where does crypto fit into all of this? Is this a reason for optimism? Covered: Bank Of Canada Maintains Policy Rate US Fed Chair’s Imminent Policy Rate Announcement What This Means For Crypto Reasons For Optimism: FED Announcement Bank Of Canada Maintains […] The post Bank of Canada Maintains Policy Rate – What This Means For Crypto appeared first on CryptosRus.

Bank of Canada Maintains Policy Rate – What This Means For Crypto

Bank of Canada maintains its policy rate. Will Jerome Powell follow suit? And, where does crypto fit into all of this? Is this a reason for optimism?

Covered:

  • Bank Of Canada Maintains Policy Rate
  • US Fed Chair’s Imminent Policy Rate Announcement
  • What This Means For Crypto
  • Reasons For Optimism: FED Announcement

Bank Of Canada Maintains Policy Rate

The Bank of Canada announced today via their official site that it’s holding its rates at their current level. The announcement comes just hours before Fed Chair Jerome Powell is expected to announce what the US plans to do with its interest rates.

“With overall economic slack now absorbed, the Bank has removed its exceptional forward guidance on its policy interest rate. The Bank is continuing its reinvestment phase, keeping its overall holdings of Government of Canada bonds roughly constant,” the Bank of Canada said.

The Bank of Canada also opined on the current state of the global economy. According to the bank, the recovery from Covid-19 is strong but uneven, citing American growth as being “robust” while China’s as modest.

In particular, China’s mixed results are due to the “property sector,” which is code for Evergrande.

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Fed Announcement: What Does This Mean For Crypto?

According to some on Twitter — and obviously we probably shouldn’t assume they are right because it’s Twitter — Bank of Canada’s dovish call is a good sign.

“You so CALLED Bank of Canada standing pat and NOT hiking despite market having priced in a 73% probability of a quarter point. Implications call for dovish Powell as we all know central banks coordinate moves,” said Danielle DiMartino Booth, a financial advisor. She also bills herself as a former Fed reserve insider.

If Booth is correct that means Jerome Powell will announce something similarly dove-ish. However, the economic conditions in the US, despite the geographic proximity, are not identical. And to think the US would coordinate with Canada may or may not be a stretch.

However, there is reason for optimism.

Fed Announcement: Reasons For Said Optimism

As crypto has gone on a tailspin, so have tech stocks. Everyone is feeling the pain. Even Netflix. The streaming giant announced subscriber growth that beat Bloomberg estimates — that was then spun as not beating subscriber growth estimates for some reason — but saw their shares free fall.

Tech stocks, like crypto, are considered risk on assets. So when the “s” hits the fan both of those get sold off for more pacifying kinds of investments, like Berkshire Capital. You know, the kind that haven’t beat the S&P in years.

But there is reason for optimism. The tech sector, which is not exclusive to Nasdaq, largely trades on the exchange. On the 24th, Nasdaq, after posting initial intraday losses, closed higher. Furthermore, today Nasdaq is performing better again ahead of the announcement.

Investors signalling a return to risk on assets might be pointing to that even if there is a hike, all of this could be priced in already. And if risk on assets are back in vogue, aka tech, then crypto should fall in line. Because unfortunately, it looks more and more like crypto is a correlated asset.

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