US investment banking giant Goldman Sachs said that the Fed may accelerate the tapering of asset purchases from January.
According to Bloomberg, Goldman Sachs said in a customer note that the Fed, which started the relaxation of crisis-era stimulus this month, may accelerate the pace of contraction next year. Goldman economists say that the Fed will raise interest rates three times in 2022 and two in 2023; On the other hand, he predicted that the policy to reduce asset purchases would double the rate of contraction by increasing it from the current $15 billion to $30 billion per month. These estimates mean that the asset purchase program will end in March.
Goldman expects the first near-zero rate hike in June. As it is known, the Fed lowered interest rates to near zero after the coronavirus collapse in March 2020 and started buying assets worth $120 billion a month. These massive liquidity injections have led to unprecedented risk appetite in every corner of the financial market, including Bitcoin, as many commentators have pointed out.
Forecasts are based on minutes from the Fed’s November meeting released Wednesday. Accordingly, the Fed had shown that it was ready to accelerate the contraction and increase interest rates if inflation continued to be high.
How Does It Affect Bitcoin?
As mentioned above, the liquidity that the Fed injected into the markets with the coronavirus collapse led to significant growth in the crypto asset market. The disappearance of these injected incentives faster than predicted may stress Bitcoin.
Bitcoin, on the other hand, fell by about 7% amid concerns over a new coronavirus variant, another piece of news that dampened risk appetite. Bitcoin, which declined to $ 53, 500, is trading at $ 54, 109 as of publication time.