Bitcoin rates surpassed the level of 62 thousand dollars today at noon, growing by over 4% following yesterday’s decision by the U.S. central bank, the Federal Reserve (FED). In the weekly scale, when the market was already betting on interest rate cuts, these increases have so far reached over 7%. Meanwhile, Ethereum, the second largest cryptocurrency, has grown by over 5% since yesterday. According to experts from Binance, the FED’s interest rate cuts could provide a strong boost to the entire cryptocurrency market.
This opinion was expressed yesterday by Richard Teng, CEO of Binance, the largest cryptocurrency exchange in the world. He believes that lower interest rates increase liquidity in the financial system, driving demand for higher yielding, more risky assets, including cryptocurrencies. For example, Bitcoin (BTC) saw an increase of 375% between February 2020 and February 2022, when interest rates were close to zero.
“Additionally, lower interest rates can stoke inflation fears – prompting some investors to turn to cryptocurrencies to protect their purchasing power – and weaken the U.S. dollar, making it more likely that investors will consider digital assets as an alternative form of value storage,” says Richard Teng.
As the CEO of Binance pointed out, Bitcoin and other cryptocurrencies may also react positively to interest rate cuts, partly due to the recent decrease in the reward for mining Bitcoin (halving), which has historically always led to price increases in the 6-18 month perspective. From this year, ETFs on Bitcoin and Ethereum are also in operation, which can facilitate the flow of capital between stocks and cryptocurrencies, strengthening the potential impact of rate cuts on cryptocurrency valuations.
Source: https://managerplus.pl/bitcoin-przekracza-62-tys-dolarow-po-decyzji-fed-o-cieciu-stop-66093
