Top 5 Cryptocurrencies to Watch If US Federal Reserve Rate Drops
TL;DR
- The COVID-19 pandemic caused major economic disruptions, causing the US government to print trillions of dollars, which led to high inflation.
- To counter this, the Federal Reserve raised interest rates to 5.25%-5.50%.
- On the other hand, lowering interest rates could increase investment in numerous cryptocurrencies after the Fed previously hinted at such a return.
Apart from the huge number of victims and the pressure on the healthcare sector, the COVID-19 pandemic that emerged at the beginning of 2020 caused vacancies, uncertainty, isolation, financial instability and many other disruptions. Amid these dire conditions, the US government printed trillions of dollars to support the war. disabled economy. However, the increased money supply led to higher inflation rates and more problems for America’s fiscal policy.
The US Federal Reserve stepped in by implementing numerous anti-inflationary measures, such as increasing interest rates. Between March 2022 and July 2023, the central bank raised the indicator 11 times in a row. The current level stands at 5.25%-5.50%.
Latest data shows that inflation is slowing in the US, which means the Fed may soon abandon its aggressive regime. In the following lines we will observe how such a measure could affect the prices of some leading cryptocurrencies.
Bitcoin (BTC)
The world’s largest digital asset conditions Market capitalization could benefit significantly when the Fed lowers interest rates. The move will make it easier to borrow money, which could lead to increased interest in risky assets like BTC. In his name, The potential influx of fresh capital into the asset could cause the price to rise.
The above is now becoming increasingly true following the launch of spot Bitcoin ETFs in early 2024. This gives retail investors familiar and comprehensive financial tools to gain direct exposure to the BTC price without having to worry about all the technical details of storage.
a famous person believes The price of BTC will rise when the Fed pivot is Mike Novogratz. He thinks the asset will be trading in the $55,000-$75,000 range by then.
solana (LEFT)
SOL experienced an impressive price increase last year, briefly breaking the $200 barrier for the first time since December 2021.
SOL Price, Source: CoinGecko
Right now, the asset is trading at around $177 (according to data from CoinGecko); This is a staggering 780% increase compared to the figure observed in May last year.
Solana‘s ecosystem has witnessed significant activity. Definition data demonstrations It is stated that the total value locked in Solana is over 4.8 billion dollars, and the in-chain trade volume has been around 1 billion dollars for the last few months.
Solana is home to many retail investors due to its faster transaction times and cheaper fees, setting the stage for potential increases if interest rate declines begin to exacerbate the risky market.
dogecoin (DOGE) and Dogwifhat (WIF)
Meme coins are often the cryptocurrency industry’s most volatile asset in the event of groundbreaking events. The leading asset of this type is Dogecoin (DOGE) and the sensation dogwifhat (WIF) built on the Solana blockchain. Definitely worth watching in case the Fed changes its strategy.
Both assets have dedicated community bases, support from prominent names and major cryptocurrency exchanges, and have gained a lot of attention.
DOGE is Tesla CEO Elon Musk’s favorite digital asset. Not so long ago, EV giant officially introduced coins as payment method. WIF received support from BitMEX co-founder Arthur Hayes.
Ethereum (ETH)
Another asset worth keeping an eye on in the event of the Fed’s pivot is the second largest asset by market cap: Ethereum (ETH). Its price had previously risen following announcements that inflation was slowing in the US or that interest rates would remain unchanged (rather than rise).
For example, ETH is up almost 10% since May 15 – that day US Bureau of Labor Statistics launched Latest Consumer Price Index (CPI) data. Recall that total CPI stood at 3.4%. Which one Definitely What were the expectations?
ETH Price, Source: CoinGecko
Polka Dot (DOT)
This popular blockchain protocol complete lots of updates lately and therefore, Also worth watching in case volatility increases. Recently the team behind activated Asynchronous backup over the network. Parachain is an optimization technique designed to improve the process of block generation and incorporation into the Relay chain (Polkadot‘s main chain).
So polkadot explained Joining-Accumulating Machine (JAM) Gray Paper. Its purpose is a technical upgrade. Creating a more efficient, secure and scalable blockchain environment that integrates the best aspects of both Polkadot and Ethereum technologies.
Its price has remained in a very narrow range over the past few months, which usually heralds significant volatility. If the Fed decides to lower interest rates, this volatility could emerge and trigger a significant move in Polkadot’s price.
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