The average citizen may think negative interest rates are impossible, but they are a very real weapon in the arsenal of central banks. And while it may be a rarely-used tactic, it is one that is relatively on the rise.
As a depositor, paying banks to hold your cash sounds absurd. However, this is the reality of the world that we live in. For cryptocurrency enthusiasts, NIRP should be music to your ears as it is bullish for bitcoin and other cryptocurrencies.
Gold Investment Executive: ‘Bitcoin Could See Long-Term Growth in Value as a Shelter in a Negative Interest Rate Environment’
We are not alone in our view that a deflationary environment with negative interest rates is bullish for bitcoin. The co-founder of MarketOrders, Sukhi Jutla, spoke to CCN and shared her view as to how a deflationary climate could impact the price of bitcoin. She said:
With negative interest rates, there is less of an incentive to save and an incentive to spend. Bitcoin, like the asset gold, stores value and are equal to current spending power. Therefore it makes sense to invest more into bitcoin when interest rates are low.
Negative interest rates raise the attractiveness of age-old stores of value like gold and Bitcoin, [which] also behaves in similar ways to gold in that there is a finite and limited supply and has real exchangeable value.
In addition, Nic Carter, a partner in Castle Island Ventures and a former cryptoasset analyst at Fidelity, supports the stance of Sukhi Jutla. The venture capitalist said,
I think persistent, deep negative rates are a redpill that awaken people to the confiscatory nature of fiat currency, and will make crypto look like a very attractive alternative.
Nic Carter also mentioned that we have yet to reach that point. However, we might soon as the amount of negative-yielding debt skyrockets. According to ZeroHedge, it could act as a catalyst for a longer bitcoin rally.
Central bank executives may call bitcoin as an ‘evil spawn’ but it appears that their policies may be the ones that will drive mass adoption.