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Bitcoin (BTC) Critic Peter Schiff Predicts Interest Rates Surge With Twist

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Sun, 19/02/2023 - 13:34
Bitcoin (BTC) Critic Peter Schiff Predicts Interest Rates Surge With Twist
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Peter Schiff, a gold bug and economist well known for his critique of the popular cryptocurrency Bitcoin, discusses one important aspect that affected the markets in the previous year: Fed interest rates.

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Throughout the past year, higher rates have been reflected in stock prices, cryptocurrency prices and the prices of commodities like oil.

Schiff claims that it took the Fed more than a decade to bring the high inflation rates of the 1970s down to 2%, a goal that was not attained again until 1998, a period of 12 years.

According to the economist, the Fed Funds rate peaked in 1986 at 16.2%, which is a significant difference from the current Fed Funds rate of 4.6%. "Interest rates still have a long way to rise," Schiff chimed in.

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He points out that the Fed cannot raise rates high enough to bring inflation back down to 2% without causing a financial crisis worse than the one it caused in 2008. The Fed will therefore give up well before inflation hits 2% (which, if measured using the CPI from the 1980s, would be 4%).

Bitcoin price action

Recently, Bitcoin (BTC) was trading at about $24,672, only slightly up over the previous day and off a weekly high early on Thursday when BTC crossed the $25,000 threshold for the first time since August.

Despite the mild retreat in price, Bitcoin was still 13% higher than it was seven days earlier. Investors continued to be generally upbeat about the cryptocurrency markets.

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Instead of going back to the more aggressive rate hikes of 2022, they predict that the Fed will approve a second consecutive 25-basis-point rate hike at its next Federal Open Market Committee (FOMC) meeting in March. Additionally, they anticipate that any economic contraction will be slight — a "safe landing."

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