The trend of the past few years of Bitcoin and gold price correlation is giving way to a new pattern: Bitcoin price and interest rates.

A recent report from Fidelity’s Active Investor Education Center notes: “While central banks do not control cryptocurrencies, crypto analysts note that the U.S. central bank in particular can indirectly influence the price of cryptocurrencies.”

Meanwhile, according to a report from SPGlobal, the daily rolling three-month correlation between interest rates and the cryptocurrency index has been inversely related 63% of the time since May 2017. That correlation has increased to 75% of the time since May 2020.

China, Canada, and South Africa on the Verge of Rate Cuts

When the U.S. suspended direct convertibility of dollars into gold in 1971 to prevent a massive outflow of the yellow metal from its economy, it created a currency market with freely floating exchange rates.

This directly impacts import/export profitability and trade balances between major international trading partners. As a result, the Fed's move to ease rates soon gives China room to cut.

With the US favourable policy on interest rate cuts in China and the renminbi's deflationary trend threatening to gain momentum, renminbi experts expect monetary policy changes soon.

BoC Governor Tiff Macklem said in a recent interview that the country's central bank is prepared for a deeper rate cut than those introduced earlier this year.

Meanwhile, South African rand analysts expect the country's Reserve Bank to announce an interest rate cut later this week.

Soft Landing Could Boost Hard Money Like Bitcoin

As financial engineers at the Fed and other central banks prepare for another soft landing of their economies, Bitcoin and other cryptocurrencies have responded with excitement and optimism.

BitMEX founder and influential cryptocurrency expert Arthur Hayes recently said he believes the USD money printer, which is triggering a new round of rate cuts, will dramatically increase the price of BTC.

He emphasized that the impact of monetary policy on BTC will be immediate and dramatic.

“They will turn on the money printer and dramatically increase the money supply,” Hayes said. “That will lead to inflation, which may be bad for certain types of businesses. But for assets with a limited supply like Bitcoin, it will be a lightspeed flight 2 Da Moon!”