The United States Fed’s decision to pause and possibly lower interest rates next year will likely serve as a “positive boost” for cryptocurrencies and crypto stocks.
on 13th december Interview With Bloomberg, BlackRock fund manager Jeffrey Rosenberg described the Fed’s rate freeze — and hint of a rate cut next year — as a “green light” for investors, with the S&P 500 rising 1.37% on the decision. .
“This bullish sentiment may continue for some time, at least until we get a new round of economic data, and until then the message is clear: The Fed is ready to see an easing of financial conditions.”
Crypto stocks also saw significant increases following the announcement, with shares of Coinbase (COIN) and MicroStrategy (MSTR) rising 7.8% and 5% respectively, while Bitcoin miner Marathon Digital (MARA) jumped 12.6%.
Perfect storm ⛈️: #bitcoin to halve;#bitcoin Spot ETF;
Fed stops raising rates, hints at 3 cuts in 2024;
good court results @Ripple , @grayscale cases;
Election year = rate cuts, with ️ go brrrrr and increased liquidity.
– John E. Deaton (@JohnDeaton1) 13 December 2023
Henrik Andersen, chief investment officer at investment fund Apollo Crypto, told Cointelegraph that he expects today’s halving and the expected reduction in interest rates in the coming year to be a “positive boost” for cryptocurrencies and crypto-related stocks, adding:
“If we see the likes of BlackRock and Fidelity launch Bitcoin ETFs we can expect many other traditional financial institutions to enter the crypto markets as well.”
Notably, as of December 11, blockchain equities have recently experienced their largest weekly inflows on record, with a staggering $126 million flowing into crypto-related shares. report From CoinShares.
James Butterfill, head of research at CoinShares, also found that digital asset investment products experienced inflows for the 11th consecutive week, recording another weekly gain of $43 million.
Tina Teng, market analyst at CMC Markets, told Cointelegraph that the Fed’s rate freeze will undoubtedly increase market enthusiasm for crypto products.
“This pivot boosted broader risk-on sentiment and improved expectations for future liquidity conditions, causing crypto stocks to surge in the same manner.”
Teng said investors can expect to see similar bullish trends that haven’t been seen since previous rate-cut cycles, something that will be fueled by institutional interest in the pending spot Bitcoin ETF, which is currently launching in early January. Scheduled for decision.
However, Anderson said a side effect of low interest rates could be a cooling of the real-world asset (RWA) token narrative, making the expected rise in DeFi yields more attractive to investors in a low-rate environment.
“So far a lot of the interest has been in tokenizing treasuries. “We now see an environment where we can generate over 10% yields in DeFi while traditional yields are going in the opposite direction,” he said.
Like many market commentators, both Teng and Anderson see the upcoming Bitcoin halving – currently scheduled for April next year – as a major catalyst for overall crypto market growth in 2024.