The Impact of the US Interest Rate on Cryptocurrencies
The interest rate set by the US Federal Reserve is considered one of the most important factors affecting global financial markets, including the cryptocurrency market. When the interest rate rises, investment in traditional assets such as bonds and the US dollar becomes more attractive to investors, as they receive higher returns with lower risks. As a result, the demand for cryptocurrencies like Bitcoin decreases, as they do not provide a fixed return and are often considered high-risk assets.
Conversely, when the Federal Reserve lowers the interest rate, money tends to flow towards higher-yielding assets like stocks and cryptocurrencies, which usually leads to an increase in cryptocurrency prices.
In general, it can be said that there is an inverse relationship between the US interest rate and the cryptocurrency market:
Rising interest ➜ Downward pressure on cryptocurrencies.$BTC
Falling interest ➜ Potential support and rise for the market.
$BTC
$BNB
like and follow for more