Regulatory Series on Cryptocurrencies: Is Bitcoin Triumphed or Trapped by Trump's Tweet?

President Trump’s intentions of pressurizing the Federal Reserve for dragging its feet on interest rate cuts might be persisted. Quite a few analysts reckon such an aggressive policy that is yet another inadvertent advertisement for Bitcoin for the US president.

While the debate about whether President Trump could decide to unilaterally intervene to correct what he regards as an unfairly strong dollar, or more accurately to strengthen what he perceives to be unfairly cheap foreign currencies, has intensified in recent weeks.

President Trump stated that he would like to see the Federal Reserve cut interest rates soon. He argues that if the economy takes a downturn in the future then it will be more costly to take action then, rather than pre-emptively.

He tweeted stating that “it is far more costly for the Federal Reserve to cut deeper if the economy actually does, in the future, turn down! Very inexpensive, in fact productive, to move now. The Fed raised & tightened far too much & too fast. In other words, they missed it (Big!). Don’t miss it again”!

While Bakkt has diligently initiated user acceptance testing for its bitcoin futures listed and traded at ICE Futures U.S. and cleared at ICE Clear US.

Bakkt’s collaboration with the ICE’s leading futures exchange and clearing infrastructure to bring physical delivery futures contracts to market participants in 30 countries.

Well, on the back of above developments, it was another chaotic trading week in the crypto asset trading markets as the Bitcoin price plunging as low as USD 9,170 on Wednesday and as high as USD 11,120 during the weekend session, before eventually settling at the USD 10,500 level to close the week. 

Whether or not the US Fed is going to be pressurized by Trump, but taking a step backwards, it seems hard to reconcile as to why the FOMC needs to lower rates: growth remains above trend, labor markets are generating enough jobs to put continued downward pressure on the unemployment rate, and inflation has firmed somewhat after moderating earlier this year, indicating some proximity to attaining the Fed’s dual mandate. However, it is clear the Fed’s reaction function has shifted, driven by a number of factors.

It is reckoned that the Fed’s reaction function has tilted more dovish given a flatter Phillips curve, increased global uncertainty, and proximity to the ELB. Fed communications and the data flow point to the rising risk of a shallow “insurance” easing cycle. 

Furthermore, Facebook's Libra is also making abuzz in entire cryptocurrency space, Gurbacs discussed with the Fox Business host Liz Claman at Senate Banking Committee hearing on Facebook’s Libra “cryptocurrency.” He tweeted by stating that Libra is not ETF but a stablecoin pegged to the basket of fiat currencies.

But, as per President Trump’s tweet that Facebook Libra’s virtual currency will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks.

Monetary easing, meticulous regulation, global slowdown, geopolitical/trade crisis, or whatsoever be the case, the dollar is most likely to be affected. Thereby, bitcoin will have upper hand provided the underlying robust technology ‘blockchain’ remains intact.