Simple Exploration of the Relationship Between Cryptocurrency Prices And Interest Rate
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Assalam-o-Alaikum Steemians !
I'm @moneyster, a professional level Cryptocurrency investor and an analyser. As usual, today I thought to share another Crypto-related experience with you. I hope this article will be considerably beneficial for all the Steemians in this community
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We already know that the Cryptocurrency Market is highly volatile as compared to other Markets such as Traditional Markets and Forex Markets. Therefore, a single piece of news can impact the entire Crypto Market within a few hours or minutes. In the list of this news, Inflation and interest rate is the foremost factor as they can affect the entire Crypto Market through single news.
These days, we were able to see some examples throughout our experience. It means we could see some sudden movements in the Crypto Market after announcing some inflation and interest related news. Some Major Crypto Traders think that as a result of increasing Interest rates, many Traders tend to exit from the market.
At the same time, some Major Traders from some major countries, they have to pay some interest rates for their Cryptocurrencies and that will be a very big disadvantage if the government has increased the interest rate. That's why we can see a sudden drop in many Crypto Markets in such situations.
However, we should understand one thing related to this inflation and Interest Rates. That is, the Crypto market sometimes reacts only to the news and it will not move exactly when the actual incident happens.
As I described above, when some popular news providers publish some news related to this factor, it can really affect the entire Crypto market as well as the stock market. Therefore, the value of any the Cryptocurrency related project can be decreased as a result of this inflation and increasing interest rate.
So, we have to select the better option in such a situation and the most popular and very large traders think that this can effects our Crypto market negatively. That's why we see a significant drop in the major cryptocurrencies such as Bitcoin. When the major cryptocurrencies move negatively, it also affects many other Altcoins including Steem.
The most problematic incident here is increasing the interest rate of Cryptocurrencies within very popular countries. Because here we have to pay some considerable amount of Tax according to our withdrawals. Therefore, most Traders have to exit from the market as they can't take the risk of a big interest rate. So, the best solution is only to exit the market by reacting to the news before happening the actual incident.
Actually, when the government decides to increase the interest rate as a result of this inflation, we can see a big downtrend in the Crypto Market price. However, this can be the best option to buy some popular Cryptocurrencies as we have the ability to buy some additional coins for a very low cost. Because this can be a good discounted price for our selected Crypto asset.
However, we don't have the ability to predict and identify the exact bottom of the market price, therefore, we have to follow some better strategies to buy new Crypto assets in such conditions. As an example, here we can follow the Dollar Cost averaging technique as we can buy any desired assets in some portions without investing in them completely using our entire investment. I have already published an article on this "Dollar Cost averaging technique" in a separate article in this community and you can refer to this article if you have any willingness related to this.
I have studied the below-sourced articles to further study these topics and I have explained all the above facts in my own words and experience.
10% benificiary set for @tron-fan-club