The cryptocurrency market surged after Fed Chairman Jerome Powell's dovish remarks, stimulating expectations for a possible interest rate cut in September.
ETH is considered the most interest-sensitive cryptocurrency due to the widening yield spread between depositing stablecoins in DeFi and bank deposits as interest rates decrease.
MAIN CONTENT
The cryptocurrency market sentiment shifted to a 'greed' state after Jerome Powell's remarks.
ETH is the cryptocurrency most strongly affected by interest rate fluctuations, according to Axie Infinity co-founder Jeffrey Zirlin.
The decision to cut or maintain interest rates is still under consideration by Fed leaders.
Why did the cryptocurrency market explode after the Fed Chairman's remarks?
Jerome Powell's dovish remarks have raised expectations for a possible interest rate cut in September, creating positive momentum for the cryptocurrency market. This has contributed to reviving investor sentiment, shifting from a state of caution to 'greed', boosting capital flows into risky assets.
This information is clearly reflected in the rapid increase in buying activities in the market, showing the widespread impact of U.S. monetary policy on cryptocurrency price volatility. The expectation of reduced borrowing costs provides an advantage for the digital asset market.
ETH is seen as the most interest-sensitive cryptocurrency; what is the reason?
According to Jeffrey 'Jiho' Zirlin, co-founder of Axie Infinity, ETH reacts strongly to interest rate changes due to the yield mechanism between depositing stablecoins in DeFi platforms and deposits in traditional banks.
When interest rates decrease, the yield spread between DeFi and banks increases, causing more capital to shift from traditional channels into assets like ETH. This creates upward price pressure and makes ETH more attractive in the eyes of cryptocurrency investors, solidifying its leading position in the DeFi market.
What is the Fed leadership's view on interest rate cuts?
St. Louis Fed Chairman Alberto Musallem emphasized that more time is needed to consider and decide whether to support interest rate cuts. This indicates that the Fed remains cautious in the context of an unstable economy.
This state of waiting means that the cryptocurrency market may continue to fluctuate according to new signals about monetary policy. Predictions about the Fed's next moves are being closely monitored by many experts and investors.
'ETH is the most interest-sensitive cryptocurrency due to the widening yield spread between DeFi and traditional banks as interest rates decrease.'
– Jeffrey 'Jiho' Zirlin, Co-founder of Axie Infinity, 23/08/2023
Frequently Asked Questions
How does the cryptocurrency market respond to the Fed's interest rate policy?
The cryptocurrency market often experiences strong volatility, with sentiment capable of shifting quickly based on expectations and interest rate policy moves from the Fed.
Why is ETH the most interest-sensitive cryptocurrency?
ETH benefits from the yield spread between depositing stablecoins in DeFi and bank savings, so interest rate fluctuations directly affect the value of this cryptocurrency.
Do current Fed leaders agree on interest rate cuts?
The Fed has yet to make a final decision and is continuing to monitor the situation to make a reasonable move in the near future.
How do interest rate cuts affect cryptocurrency investment?
Interest rate cuts often drive capital into risky assets, including cryptocurrencies, increasing their attractiveness and value.
How to track interest rate remarks that influence cryptocurrencies?
It is advisable to closely monitor the Fed meetings, speeches, and in-depth analyses from reputable financial experts.
Source: https://tintucbitcoin.com/dong-sang-lap-axie-ethereum-nhay-lai-fed/
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