The European Central Bank declared it would not modify its interest rates and COVID-19 incentive plans despite a strong Euro — which Bitcoin billionaire Tyler Winklevoss called a “powerful advertisement for Bitcoin.“
The European Central Bank (ECB) announced yesterday, Thursday, Sept 10, that it held its interest rates and coronavirus-stimulus program maintained notwithstanding the euro rising over 5% against the US dollar since July.
The growth in the euro’s strength will mean cheaper imports and will put a strain on euro-zone exporters, forging tighter financial conditions for the broader economy.
The ECB stimulus money printing and interest-free lending to companies seem set to maintain. It stated it would not be making any immediate adjustments to raise inflation or alter its Pandemic relief program, which remains at a total of 1.35 trillion euros.
Bitcoin billionaire Tyler Winklevoss chimed to promptly make a case for Bitcoin on Twitter following the ECB’s statement—to continue refinancing operations, marginal lending facility, and the deposit facility unchanged 0.00%, 0.25%, and -0.50%, respectively.
Tyler Winklevoss twitted:
The ECB increased its COVID-stimulus program from 750 billion euros to 1.35 trillion euros in June, and it is expected to last and increase until June 2021, which will mean more new money creation and a need to raise interest rates. However, the ECB last forecasted the annual inflation to reach 0.3% by the end of 2020, below its target of 2%—which also drew the criticism of the Gemini exchange founder and early Bitcoin investor. Tyler Winklevoss
Winklevoss continued in another tweet:
As previously reported by Blockchain. News, Bitcoin is now more closely correlated to haven asset gold than ever, which empowers the world’s largest cryptocurrency to resist risk objection in the traditional markets.
According to Bloomberg’s records, the correlation between Bitcoin and gold is now the highest since 2010. During the current unprecedented economic turmoil, investors have fled to haven assets, such as gold. With the injection of fiat currencies due to recent economic stimulus, investors may hedge in alternative investments. This could be a possible explanation for the record-high correlation between Bitcoin and Gold.
It also means that the ECB’s continued money printing and nicely as the Federal Reserve to stimulate the economy should ultimately drive up the value of both Gold and Bitcoin.
Edward Meir, an analyst at ED&F Man Capital Markets, submitted his comment:
“All the central banks are in the same boat. They will have to keep printing money, keep easing policy, in order to fight the slump we are in and that will keep gold supported.”