Will Europe's negative interest rates affect Bitcoin prices?

okthen

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Quote from: Swordsoffreedom on June 09, 2014, 04:55:02 PM

Quote from: Asrael999 on June 09, 2014, 03:26:35 AM

The Euro is proving to be a more deflationary currency that Bitcoin at the moment

True enough,
I have heard for a while now the Euro will collapse but I guess that's not happening just going through several painful cycles

I hope this is true.
But you can feel a real tense climate in Europe.
Many people in the North support a division in two of the EU. And of the coin as well...

Swordsoffreedom

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Quote from: Asrael999 on June 09, 2014, 03:26:35 AM

The Euro is proving to be a more deflationary currency that Bitcoin at the moment

True enough,
I have heard for a while now the Euro will collapse but I guess that's not happening just going through several painful cycles

Asrael999

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The Euro is proving to be a more deflationary currency that Bitcoin at the moment

Cranky4u

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Quote from: Hunyadi on June 09, 2014, 02:40:10 AM

It should massively! Negative interest are extraordinary thing. It tells you something about the state of FIAT money. This is the first occurrence I consider the possibility of cryptos to replace FIAT...of course it is highly uncertain but still... if you give 1% chance that BTC will be 1000000 USD, how much would you pay for it? Wink

Bring it on...even my 0.2BTC will pay a large chunk of my house if this comes to be

Hunyadi

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It should massively! Negative interest are extraordinary thing. It tells you something about the state of FIAT money. This is the first occurrence I consider the possibility of cryptos to replace FIAT...of course it is highly uncertain but still... if you give 1% chance that BTC will be 1000000 USD, how much would you pay for it? Wink

Raize

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If banks take on more risk, they'll be investing in the latest Bitcoin-based businesses willing to take on fiat debt. These guys will have to buy coin, so it absolutely affects Bitcoin price. As they make more money and just outright pay off their fiat debts, the banks will inevitably look for more Bitcoin-based businesses. To some extent this is what led to the Dot-Com craze, honestly. People were willing to put millions into Pets.com because of the success of all the others before it. It'd be silly to say that bankers that realize how much Bitcoin-based businesses can make wouldn't do the same.

The problem is that the present fiat system rewards idiocy amongst bankers. So well after the price has "peaked" to an extent, bankers will still be lending fiat money. Some of these businesses will look quite absurd and customers just won't jump in. This will affect valuations and you'll see some debtors just can't repay loans. This will give some bankers pause. Fewer and fewer Bitcoin-based businesses will then come in. And, worse, a huger portion of these businesses won't be able to survive a 20% price drop, let alone a %10 price drop. So yes, the next bubble is both inevitable and still very much a bubble. Be prepared.

BitcoinLlama

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Yeah more people will get into bitcoin. Europe and US will have kinda similar policies probably i would think. They will cooperate. Savers will ultimately have to pay this like Max Keiser says.

10c

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depends on how you look at it
if you follow the european bitcoinmarket only then yes btc will be worth more because euro is becoming even more worthless than it already was.

Swordsoffreedom

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Would it be a reasonable argument to say that a negative interest rate means that the money supply is decreasing.

I presume at a rate proportional to units of currency printed.
Or would the inflationary effects on the Euro take over because of the increased risk banks need to take by having investment into businesses and companies and their bond instruments instead.

Hard to tell right now two scenarios for me are a period of deflation which isn't necessarily awful as goods and services get repriced at a lower rate and the strength of the currency increases and a period business of slow business growth followed by rapid business growth as the money stabilizes.

Or a period of high risk business creation and a market of loaning to bolster economic growth, followed by an economic crisis in some countries in the Eurozone and then a boost to the economies of other countries in exchange as they try to optimize against one another by offering the best deals for investment.

Thoughts?

@Although 0% Loans for 12 Million Bitcoins XD (Cant got to infinite

)

maker88

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Quote from: Elwar on June 06, 2014, 09:06:10 PM

Quote from: bitcoinsrus on June 06, 2014, 08:52:09 PM

Quote from: Elwar on June 06, 2014, 08:47:23 PM

http://www.cryptocoinsnews.com/news/ecb-announces-negative-interest-rates-bitcoin-price-rallies/2014/06/05

The European Central Bank has cut interest rates on deposits to -.1% pretty much forcing banks to pay to have money in their accounts.

Do you think the Federal Reserve will follow suit and is this the start of competing hyperinflation between nations as they destroy their currencies in an attempt to boost their economies?

How good do you feel that your bitcoin currency does not charge just to hold it?

Can someone explain to me about this whole negative interest thing in depth. Okay if money is in one of these banks, they have to pay more interest on the more they keep. They will be more likely to lend the money. Then the depositors will have extra fees to cover this.

This will circulate the money (and basically everyone pays more). Is my understanding correct and what am I not getting. Also, what other possible ramifications could these lead to?
Thanks

The European central banks lend money to the banks who in turn lend that money to people and businesses. There is not enough demand for loans so the banks are sitting on a lot of money. Now with negative interest rates the banks have to pay for money that they hold so they will be encouraged to get rid of it. They will give out really cheap loans at close to 0% rates.

Imagine if everyone in Europe took out a 0% loan on as much money as they could get. The market would be flooded with new money. The printing presses would be churning, prices go up because everyone has plenty of money to throw around, they'll just borrow more. The value of the currency falls encouraging more borrowing and spending as the printing presses pump out money at full steam.

Digital wheelbarrows of money become the norm to pay for everyday goods. Including bitcoins.

if the federal reserve follows suit I'm getting a loan for as much as i can and buying coins haha

Elwar

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Quote from: bitcoinsrus on June 06, 2014, 08:52:09 PM

Quote from: Elwar on June 06, 2014, 08:47:23 PM

http://www.cryptocoinsnews.com/news/ecb-announces-negative-interest-rates-bitcoin-price-rallies/2014/06/05

The European Central Bank has cut interest rates on deposits to -.1% pretty much forcing banks to pay to have money in their accounts.

Do you think the Federal Reserve will follow suit and is this the start of competing hyperinflation between nations as they destroy their currencies in an attempt to boost their economies?

How good do you feel that your bitcoin currency does not charge just to hold it?

Can someone explain to me about this whole negative interest thing in depth. Okay if money is in one of these banks, they have to pay more interest on the more they keep. They will be more likely to lend the money. Then the depositors will have extra fees to cover this.

This will circulate the money (and basically everyone pays more). Is my understanding correct and what am I not getting. Also, what other possible ramifications could these lead to?
Thanks

The European central banks lend money to the banks who in turn lend that money to people and businesses. There is not enough demand for loans so the banks are sitting on a lot of money. Now with negative interest rates the banks have to pay for money that they hold so they will be encouraged to get rid of it. They will give out really cheap loans at close to 0% rates.

Imagine if everyone in Europe took out a 0% loan on as much money as they could get. The market would be flooded with new money. The printing presses would be churning, prices go up because everyone has plenty of money to throw around, they'll just borrow more. The value of the currency falls encouraging more borrowing and spending as the printing presses pump out money at full steam.

Digital wheelbarrows of money become the norm to pay for everyday goods. Including bitcoins.

redwhitenblue

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I would think they will cause the price of BTC to increase.

The negative interest rate policy will possibly do two things (it will actually probably do both).

1 - This will cause banks to take on more risk. With banks taking on more risks, borrowers and other investors will in turn take on additional risk, which will eventually spill into investing in BTC.

2 - This will cause banks to wish to have less deposits on hand. They will achieve this by lowering the rate of interest they pay for savings/checking/CD deposits and by increasing fees for utilizing their services (and raising the threshold to qualify for fee waivers). This creates incentives for people to hold less deposits in European banks, and one alternative to holding money in European banks is holding money in Bitcoin.

bitcoinsrus

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Quote from: Elwar on June 06, 2014, 08:47:23 PM

http://www.cryptocoinsnews.com/news/ecb-announces-negative-interest-rates-bitcoin-price-rallies/2014/06/05

The European Central Bank has cut interest rates on deposits to -.1% pretty much forcing banks to pay to have money in their accounts.

Do you think the Federal Reserve will follow suit and is this the start of competing hyperinflation between nations as they destroy their currencies in an attempt to boost their economies?

How good do you feel that your bitcoin currency does not charge just to hold it?

Can someone explain to me about this whole negative interest thing in depth. Okay if money is in one of these banks, they have to pay more interest on the more they keep. They will be more likely to lend the money. Then the depositors will have extra fees to cover this.

This will circulate the money (and basically everyone pays more). Is my understanding correct and what am I not getting. Also, what other possible ramifications could these lead to?
Thanks

Elwar

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Activity: 3598

Merit: 2386

Viva Ut Vivas

http://www.cryptocoinsnews.com/news/ecb-announces-negative-interest-rates-bitcoin-price-rallies/2014/06/05

The European Central Bank has cut interest rates on deposits to -.1% pretty much forcing banks to pay to have money in their accounts.

Do you think the Federal Reserve will follow suit and is this the start of competing hyperinflation between nations as they destroy their currencies in an attempt to boost their economies?

How good do you feel that your bitcoin currency does not charge just to hold it?

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