Amidst the pestering inflation and its effect on interest rates decisions, Federal is reportedly likely to deliver a 75 basis point hike in November, which could be a matter of concern for the crypto industry.
Finance experts are speculating that this can potentially create a negative impact for risk assets like cryptocurrencies and stocks that do not offer regular interest payments.
When interest rates increase, it becomes more expensive to borrow money, which in turn causes people to borrow less and thus, save more money. However, this certainly causes the economy to shrink. But higher interest rates results in less liquidity in crypto as well as the stock markets.
Investor psychology can also cause markets to slide, as investors may want to safely move their money out of stocks or crypto into less volatile investments, such as government bonds or say, gold.
Notably, when it comes to stablecoin use, USDT has completely removed commercial paper from their reserves. The company’s main reserve assets are now US treasury bills. Amidst all the questions that were posed on Tether’s USDT and its reserves, Tether‘s decision can seemingly ease any tensions concerning the stablecoin’s future.At the time of writing, the FedWatch Tool showed 97.2% chances that it would rise to 375-400 basis points at the November policy meeting.In September too, cryptocurrencies including Bitcoin (BTC) and Ethereum (ETH), had seen their prices drop after the Consumer Price Index (CPI) for August rose to 8.3% instead of the expected 8.1%.
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Source: Cryptocurrency - investing.com
