How does the feds funds rate affect the value of cryptocurrencies?

1 answers

• Dec 17, 2021 · 3 years ago
  The feds funds rate, set by the Federal Reserve, can have a significant impact on the value of cryptocurrencies. When the Fed raises interest rates, it can signal a tightening of monetary policy and a desire to control inflation. This can lead to a decrease in the value of cryptocurrencies as investors may perceive them as riskier assets compared to traditional investments. Additionally, higher interest rates can make borrowing more expensive, which can affect businesses that rely on loans to operate, potentially impacting the adoption and use of cryptocurrencies. Conversely, when the Fed lowers interest rates, it can signal an expansionary monetary policy and a desire to stimulate economic growth. This can increase the value of cryptocurrencies as investors may view them as attractive alternatives to traditional investments. Overall, the feds funds rate can influence the value of cryptocurrencies through its impact on investor sentiment, borrowing costs, and economic conditions.
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