As the coronavirus pandemic continues to rage on in America, the U.S. economy shrunk at a 32.9% annual rate from April through June, its worst drop on record. The GDP dip was nearly four times worse than the 2008 financial crisis peak when it experienced a decline of 8.4% in a single quarter.
In response to the second-quarter results, the Federal Reserve announced that interest rates would remain at zero for as long as it takes for the economy to recover.
"We are committed to using our full range of tools to support our economy in this challenging environment," Fed Chairman Jerome Powell said.
This week, the U.S. dollar also took a significant hit. Against baskets of other currencies, the dollar index fell 0.4% to 93.41. The weakening U.S. dollar drove the Euro to $1.19 Friday, a two year high, and its most substantial one month increase since 2010.
The Euro isn't the only thing benefiting from the dollar's downfall – gold, silver, and Bitcoin have also seen significant gains. Gold is up 8% this month, and according to CNBC, it is prepared to close out its fifth-straight positive month for the first time in nearly a decade.
This week, Bitcoin hit a new 2020 high of $11,377, a spike that flipped nearly 95% of Bitcoin's supply profitable.
In light of the current U.S. economic downturn and the continued liquidity influx, Mike Novogratz, the founder and CEO of Galaxy Digital, predicts that Bitcoin will hit $14,000 in the next three months and could reach $20,000 by the end of the year.
What do you think? Where is Bitcoin headed? Leave your comments on Twitter.
CBDCs on the Rise
Central Bank Digital Currencies (CBDCs) are gaining traction around the globe. According to the Bank of International Settlements, 80% of the world's top central banks are researching them.
This week, Coindesk reported that the Bank of England's new real-time gross settlement service (RTGS) would be compatible with CBDCs, like a digital pound. The news comes after BoE Governor Andrew Bailey announced earlier this month that the bank was seriously considering the launch of a CBDC.
In Japan, the digital yen is also moving forward. In an interview with the Asahi Shimbun, a Japanese news outlet, the central bank of Japan's director-general said that a CBDC is a top priority and is moving "beyond the preparatory stage."
The United States has been less forthcoming with its plans to create a digital dollar, causing some to worry that the country will be at a disadvantage. "We're falling a little bit behind when you look at what other countries have done," said Sharon Bowen, a former CFTC commissioner who currently sits on the New York Stock Exchange board, in a webinar last week.
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