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US Federal Reserve's $100B loss receives positive response from Bitcoin investors

US Federal Reserve’s $100B loss receives positive response from Bitcoin investors

The U.S. Federal Reserve has announced accumulated losses of $100 billion in 2023, which is expected to worsen in the future. This financial setback is due to interest payments on the Fed’s debt surpassing its earnings. This situation has raised concerns about interest rates and the demand for assets like Bitcoin. Some analysts predict that the Fed’s losses could double by 2024. Despite the Fed’s losses, it can still conduct monetary policy and achieve its objectives. The losses are a result of expansionary measures taken in 2020 and 2021 to prevent a recession. The U.S. debt has reached $33 trillion, making the situation unsustainable. The significant demand for short-term bonds and money market funds reflects the trillions of dollars injected into the economy during the pandemic. However, there is no guarantee that inflation will remain below a fixed yield on investments. Investors also face the risk of dilution when the Fed injects liquidity into the market. Real estate and stocks are no longer reliable stores of value due to inflationary pressures and rising mortgage rates. As a result, Bitcoin and cryptocurrencies may become viable hedge options as investors realize the boundless nature of the U.S. government’s debt ceiling.

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