How does the real rate of interest affect the value of cryptocurrencies?

1 answers

• Dec 16, 2021 · 3 years ago
  The real rate of interest has a significant influence on the value of cryptocurrencies. When the real rate of interest is high, it incentivizes investors to allocate their funds to traditional financial instruments that offer a guaranteed return. This shift in investment preference reduces the demand for cryptocurrencies, resulting in a decline in their value. Conversely, when the real rate of interest is low, investors are more likely to explore alternative investment options, including cryptocurrencies, in search of higher returns. This increased demand can drive up the value of cryptocurrencies. Therefore, understanding the relationship between the real rate of interest and cryptocurrencies is crucial for investors to make informed decisions and navigate the market effectively.
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