Lower interest rates could be the key to DeFi summer: HashKey CEO
Declining interest rates — along with rising investment in Bitcoin — could provide the fuel the DeFi market needs to experience a long-awaited resurgence.
It’s been a wild ride in the markets in recent days. The United States Federal Reserve is forecast to cut interest rates in 2024, but uneven inflation prints and a somewhat contradictory jobs market have created a lack of consensus on the total number of rate cuts for the remainder of the year.
As we contemplate where the market goes from here, speculation remains around the question of what the Federal Reserve has in store. So what are some potential outcomes from interest rate cuts? Let’s explore the impact on a few areas of the crypto industry.
As rates come down, the resultant weakening of US Treasury yields are likely to strengthen the spotlight on riskier but higher yield opportunities elsewhere — and that means investors will likely have a greater appetite for cryptocurrencies. This uncertainty puts the focus on Bitcoin (BTC), which is typically seen as a risk-on asset. When interest rates drop, investors pile into riskier asset classes.
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Author: Deng Chao
