USDT fell from 7.3 RMB to 6.9 RMB. Will it appreciate during the interest rate cut cycle?

The price of the currency held did not rise, but the price of USDT fell. Many investors were troubled by this and turned their attention to the possible depreciation of USDT in the future.

A few months ago, one USDT was worth 7.3 RMB, but now it is only worth 6.9 RMB. Even if you do not make any investment, your assets have still decreased by about 6%.

Taking the last interest rate cut cycle from August 2019 to March 2020 as an example, the exchange rate of the US dollar against the RMB changed from 7 to 6. USDT, as a stable currency pegged to the US dollar, also depreciated during this period.

Now that the interest rate cut cycle has begun, the depreciation of USDT may also come with it.

First, the Fed's interest rate cut is equivalent to printing more US dollars. When supply exceeds demand, the depreciation of the US dollar is likely to occur.

Secondly, the United States continues to repay old debts with new debts. This "snowball" method has made the US debt crisis more and more serious, reducing the attractiveness of US dollar assets, and it is easy to cause the depreciation of the US dollar.

Not only is the US debt default a "time bomb", the first 50 basis point interest rate cut in history is accompanied by a disaster in the financial market. This time the interest rate cut cycle starts with 50 basis points, which is obviously a bad omen. Choosing a good safe-haven asset has become the primary issue.

As a secondary market investor, you should not only pay attention to the returns of risky assets, but also pay more attention to the depreciation of stable assets such as USDT.