If you are starting in the crypto world, you may have already seen this happen: $BTC starts to rise just when central banks announce a decrease in interest rates. But what is the relationship between these two things?
Let's simplify:
Interest rates are the tool that central banks use to control the economy. When they are high, money becomes more expensive — that is, it becomes less attractive to take out loans and invest in risky assets. This favors conservative investments, such as government bonds.
But when interest rates fall, the scenario changes.
Money becomes "cheaper": more credit available and more circulation of capital.
Investors move away from traditional bonds, which yield less, and begin to seek assets with greater appreciation potential — such as $BTC.
The appetite for risk increases, and the cryptocurrency market heats up.
Moreover, $BTC is seen by many as an alternative store of value — especially in times of expansive monetary policies. If banks print more money and lower interest rates, the purchasing power of traditional currencies tends to fall... and interest in decentralized assets rises.
In summary:
High interest = less risk, less crypto.
Low interest = more appetite for risk, more crypto.
Of course, other factors also impact the price of Bitcoin, such as regulations, macroeconomic events, and even whale behavior. But understanding the effect of interest rates already puts you a few steps ahead.
Did you already know this relationship? Or is it new to you?
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