Big Changes Ahead in 2024: Biden’s Bailout, the Dollar, and Crypto’s Big Boom 

As 2024 approaches, the financial landscape is brimming with pivotal changes that could dramatically impact both the traditional and digital currency markets. Amidst the Federal Reserve’s plans to inject a significant amount of money into the economy, coupled with similar moves from China, Bitcoin and other cryptocurrencies are poised for potentially unprecedented growth. Over the last year, we’ve already seen the bitcoin price double, fuelling speculations about substantial institutional interest in the crypto space.

The strategic moves by BlackRock have hinted at a possible influx of Wall Street investments into cryptocurrency. Furthermore, discussions are circulating about a significant Federal Reserve bailout in 2024, intended to bolster President Joe Biden’s economic agenda. This development could have profound implications for the U.S. dollar’s value and potentially catalyse a surge in Bitcoin and other digital currencies.

Tech investor David Sacks raised the possibility on X of the Fed revising down inflation forecasts and signalling upcoming rate cuts for 2023 and 2024. He speculated that an early rate cut in 2024 could inject a wave of optimism into Biden’s campaign. Investor Chamath Palihapitiya suggested that such a rate cut could redirect a substantial sum, around AU$1.49 trillion (US$1 trillion), from money market accounts into the broader market.

Amidst these fiscal adjustments, U.S. inflation has seen a significant decrease from over 9% to roughly 4.8% (3.2% in USD) in the past year. This downturn is largely attributed to the normalising supply chain post-Covid and the reduction in government stimulus. The avoidance of a recession has been a narrow escape, yet the possibility of an economic downturn could adversely affect President Biden’s approval ratings, particularly with former President Donald Trump potentially re-entering the political arena.

Jerome Powell, Chair of the Federal Reserve, recently indicated a more cautious stance on interest rate hikes, which has been well-received by both stock and crypto markets. The Fed’s projections suggest a potential 75 basis point reduction in rates by 2024. Powell emphasised the need for a careful approach, acknowledging the premature nature of declaring a complete economic recovery.

The Fed’s shifting strategy has resulted in a decline in the U.S. dollar’s strength, with many analysts forecasting further weakening in 2024. Treasury Secretary Janet Yellen has been instrumental in maintaining liquidity in the U.S. financial markets. Arthur Hayes, a notable figure in the cryptocurrency sector, predicts that these efforts could propel the bitcoin price to an unprecedented high, potentially reaching around AU$1.49 million (US$1 million) per bitcoin. This would elevate Bitcoin’s market capitalisation to an estimated AU$ 29.8 trillion (US 20 trillion). Yellen’s projections align with this optimistic outlook, anticipating a significant reduction in inflation by 2024, subsequently lowering interest rates.

 

 

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