Due to the globalization of the financial markets, the activities of the Federal Reserve have a direct impact on global financial markets, including the cryptocurrency industry. Just like how the Fed regulates inflation and economic growth through the use of interest rates, the same impact the prices of $BTC and $ETH .
Rate Hike:
Whereby, high rate of interest leads to high cost of borrowing as well as a higher value of the US dollar. This typically results in:
Lower appetite for riskier instruments such as cryptos.
More affordable cryptocurrencies as investors look for safer and less volatile investment opportunities
Rate Cut:
Lowering of interest rates reduces the cost of borrowing hence a depreciation of US Dollar. This typically results in:
Growth in the desire for unsteady investments such as #Bitcoin❗ and other #altcoins
Increased cryptocurrency prices, due to the quest for higher returns
There may be more chances for a short-term bounce in the crypto market.
No Change:
This means that the current interest rates should be left as they are, which paints the picture of a stable economy. This typically results in:
Further fluctuations in this market, given that investors always expect future adjustments in interest rates.
Some mixed signal in the cryptocurrency market
In this case understanding such dynamics gives the investor an edge in controlling for risk in the cryptocurrency investment market due to the Fed’s policy decisions.
#BTCFOMCWatch #altcoins #altcoins
This is not an investment advice, crypto trading involves risk.
