The FED will announce its September interest rate decision tomorrow, which is critical for the markets. While there have been many predictions and comments on this subject, Binance CEO Richard Teng also commented on the eagerly awaited FED decision.
FED Decision Will Have a Huge Impact on Cryptocurrencies!
Stating that the FED interest rate decision will have significant and major impacts on the Bitcoin (BTC) and cryptocurrency markets, Teng said that he thinks crypto prices will increase as interest rates decrease.
Arguing that lower interest rates will bring more liquidity to the financial system, which will increase the demand for high-risk assets such as crypto, the Binance CEO pointed out that Bitcoin gained 375 percent in value between 2020 and 2022, when interest rates were close to zero.
Stating that the impact of interest rate cuts will not be limited to just the impact on BTC and crypto prices, Teng said that low interest rates can direct investors to crypto in order to protect the value of their money.
Teng also added that as the US dollar weakens, more investors may view crypto assets like Bitcoin as a safe haven.
“With digital asset prices hovering below peaks seen a few months ago, a rate cut could be just what is needed to inject some much-needed momentum into the cryptocurrency market.
Historically, cryptocurrencies like Bitcoin have generally reacted negatively to interest rate hikes. Conversely, interest rate cuts are generally seen as good for cryptocurrencies, which are considered risky assets.
For example, between February 2020, when the Fed cut interest rates to near zero, and February 2022, when interest rate hikes returned, the price of BTC saw a massive 375% increase.
There Are Many Events That Will Support the Price Increase in Bitcoin!
Binance CEO pointed out that there are many events that could trigger an increase other than the FED interest rate cut.
Noting that Bitcoin halving has historically led to price increases, Teng added that spot Bitcoin ETFs could also support this increase.
Teng, who also drew attention to seasonality in addition to the halving and ETF effects, stated that the increases generally came in October.
“….Outside of the presumed post-halving bullish cycle, September is historically among the weakest months for crypto markets.
“And prices typically recover from October onwards. If this dynamic plays out again, the expected rate cuts could provide additional momentum as prices bounce off the bottom.”
*This is not investment advice.
