After reaching a six-week high of $24,265 on Wednesday, Bitcoin (BTC) dropped to below $23,000. Despite the decline, its price increased 14% for the month, according to statistics from CoinDesk.
In the meanwhile, ahead of the anticipated first interest rate increase by the European Central Bank in eleven years, the euro, the single currency of 19 of the 21 member states of the European Union, held onto its recent gains versus the US dollar.
Early in the Asian trading session, the EUR/USD pair climbed to a two-week high of 1.0273; at the time of publication, it was trading flat at 1.0180. Early this month, the so-called “shared currency” fell below parity with the dollar, setting a two-decade low.
Following the ECB rate announcement scheduled for this Thursday at 12:15 GMT, ECB President Christine Lagarde will hold a news conference at 12:45 GMT. From the current record low of -0.5 percent, the bank is expected to increase the benchmark interest rates by 25 basis points to -0.25 percent. Rates have been kept below zero for many years by the ECB, Bank of Japan, and Swiss National Bank.
According to plans set forth at the June meeting, the European Central Bank will raise policy rates by 25 basis points on July 21 and essentially commit to an increase of at least 50 bps in September, according to analysts at BNP Paribas.
In the past, the ECB rate choices haven’t had a big impact on cryptocurrencies. The next decision is crucial, though, since the central bank is expected to suggest that further rate rises are on the way in addition to raising interest rates for the first time since 2011. That would entail changing its negative interest rate policy (NIRP), which allows borrowers to earn interest instead of paying lenders for the cost of borrowing money. Rates have been kept below zero for years by the ECB, Bank of Japan, and Swiss National Bank to promote growth.
Negative interest rates have long been highlighted by opponents of the fiat monetary system and the central bank medium of exchange as proof that traditional finance is on the verge of collapse and that it is necessary to look into alternatives like cryptocurrency. So, it stands to reason that the NIRP’s reverse would be negative for bitcoin and other cryptocurrencies. But one expert claims that’s not the case.
The parent organization of CoinDesk, Digital Currency Group, owns Genesis.
