How can the Fed's target interest rate influence the price of digital currencies?

1 answers

• Dec 17, 2021 · 3 years ago
  The Fed's target interest rate can have a ripple effect on the price of digital currencies. When the Fed raises interest rates, it can lead to a stronger US dollar. Since digital currencies are often traded against the US dollar, a stronger dollar can make digital currencies relatively more expensive. This can result in a decrease in demand and a subsequent drop in the price of digital currencies. Conversely, when the Fed lowers interest rates, it can weaken the US dollar, making digital currencies relatively cheaper. This can stimulate demand and drive up the price of digital currencies. It's important to note that the relationship between the Fed's target interest rate and the price of digital currencies is complex and can be influenced by various factors, including market sentiment and global economic conditions.
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