Binance CEO Richard Teng made optimistic statements about how possible interest rate cuts by the US Federal Reserve (Fed) could affect digital asset markets.
Teng said that interest rate declines could significantly increase the value of cryptocurrencies.
Interest rate cuts could boost demand for crypto assets
Teng said that potential interest rate cuts will have a strong impact on digital asset prices, adding: “We anticipate that the expected interest rate cuts will have a major impact on digital asset prices. Lower interest rates provide liquidity to the financial system, which in turn increases demand for high-yielding, risky assets like crypto.”
Teng also drew attention to similar situations in the past and reminded that Bitcoin gained 375 percent in value between 2020 and 2022, when interest rates were close to zero.
Inflation and investor behavior
Teng said that decreases in interest rates could not only lead to price increases but also changes in investors' behavior, and inflation concerns could increase.
“Lower interest rates could fuel inflation concerns and drive some investors to crypto assets to maintain their purchasing power. Also, with the dollar weakening, more investors may consider digital assets as an alternative store of value,” Teng said.
Bitcoin halving and the impact of spot ETFs
Teng also drew attention to the Bitcoin halving event and the potential impact of spot ETFs. Teng said that Bitcoin halving events have historically led to price increases 6 to 18 months later. “In addition, the launch of spot ETFs could enable smoother transitions from stocks to crypto and allow increased liquidity from interest rate cuts to flow into crypto markets,” he said.
Bitcoin usually starts to recover in October
Noting that September is generally a weak period for digital assets, Teng stated that markets tend to recover after this period. “Although September is generally a weak month for digital assets, prices usually start to recover from October. Expected interest rate cuts could add additional momentum to this recovery,” he said.
Finally, Teng admitted that the exact effects of the Fed’s interest rate cut policies on the cryptocurrency market are unclear, but said that historical data and current indicators suggest that this process could create a positive environment for crypto investors.
Stay tuned for new information.
