A report claims that negative interest rates present Bitcoin (BTC) with a unique opportunity.

The May fourteen study, published by Stack Funds, stipulates that if the interest rates in the U.Southward. turn negative in the most time to come, it will forcefulness market participants to look for alternatives to traditional avails. This could nowadays Bitcoin with a existent opportunity to garner institutional adoption.

Negative interest rates

It is of import to keep in mind that there is no single involvement rate in the economy, but rather many. The i that the report alludes to is a Federal Funds Rate — an overnight rate at which depository institutions lend funds to each other in the U.S.

Federal Funds Rate. Source: Federal Reserve Bank of New York.

The written report observes that negative interest rates are a sign of a weakening economy:

"Theoretically, a negative involvement charge per unit occurs when a central bank needs to boost a weakening economy. During large deflationary periods, people and businesses are keeping their greenbacks instead of spending, and negative interest rates encourage this action every bit opposed to them keeping information technology in a depository financial institution."

Institutional interest

When low or negative interest rates prevail in the economic system, it makes the job of investment managers hard as all the yield on all traditional assets will be low too. This prompts them to look for culling avails that, despite the prevailing economic weather, may still present attractive returns.

"it is difficult to argue why a fund manager would non consider the digital nugget as a hedge to their portfolio. As I like to put it, 'Bitcoin is an asset built-in from a recession, and will further evidence its robustness through a recession.'"

Meanwhile, the institutional involvement in Bitcon has been on the rising recently, with prominent hedge fund director, Paul Tudor Jones, joining the bandwagon.