How does the federal interest rate affect the value of digital currencies?

1 answers

• Alisher MatkarimovJan 05, 2022 · 4 years ago
  The federal interest rate has a direct impact on the value of digital currencies. When the federal interest rate is raised, it can lead to higher borrowing costs, which can reduce investment and spending. This decrease in demand can result in a decline in the value of digital currencies. Conversely, when the federal interest rate is lowered, borrowing becomes cheaper, which can stimulate investment and spending. This increased demand for digital currencies can potentially drive up their value. However, it's important to note that the relationship between the federal interest rate and the value of digital currencies is not linear and can be influenced by various factors such as market sentiment and regulatory developments.
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