Correlation of US Federal Reserve Interest Rates and Crypto Markets
The Fed Reserve's interest rate decisions have a big impact on the financial world. That includes Bitcoin. Crypto is often seen as an asset that can protect against inflation. But the US central bank's decisions on interest rates often cause the crypto market to go into a frenzy.
Therefore, the people of crypto world are anxiously waiting for the central bank's decision. Today, the central bank will hold a meeting to decide whether to continue lowering the bank interest rate. I have to make a decision whether to keep it this way or not.
Increases and decreases in bank interest rates have different effects; This is due to investor sentiment and the general economic outlook.
If the bank interest rate is reduced, the crypto market can increase liquidity, so the crypto world gives positive feedback. Therefore, the demand for Bitcoin can also increase.
On the other hand, if the bank interest rate is raised, it will decrease the liquidity, which may decrease the demand for crypto.
What happens if the bank lowers the interest rate?
Lowering interest rates means a weaker economy. Therefore, when the central bank lowers the interest rate, it becomes more worthwhile to take a loan. So people borrow money and invest in risky assets like Crypto.
What happens if the bank raises interest rates?
On the other hand, raising the bank rate has the opposite effect. When the bank interest rate rises, liquidity becomes less, so many people are not interested in high-risk assets like Crypto . That's why investors are selling crypto currencies like Bitcoin, which fluctuate in price.
