So, if we see another round of Taper Tantrum, which caused turbulence in the markets in 2013, this will have a negative impact on bitcoin and the crypto market with its inherently stronger movements compared to blue-chip stocks.
However, it is unlikely that a rollback from the Fed is something to be seriously feared for the time being. Despite possible signs of displeasure with Powell’s bloated equity capitalisation, a withdrawal of support for the markets would almost certainly be a shock to the economy, ensuring a second recession.
What is worse, is that if government bond purchases are curtailed, yields could quickly spiral out of control as the largest of long-term buyers leave the market. Thus, fears of a rollback are nothing more than concerns about a new extreme bad scenario. So far, neither the Fed nor Powell has been seen to create black swans.
The FxPro Analyst Team