TL; DR
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A few months ago, the market was overjoyed to hear that interest rates would not be increased further. But now the market is concerned that rates are not about to be cut. Same message, different response.
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More money tied up in loan payments = less money to invest. One hope was that it would be found in the mud potential of lowered interest rates sometime in the next six to 12 months, but the Fed is remaining painfully tight-lipped.
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The moral of the story: If the ETF news doesn’t make headway, we might have to wait a while for the next price pump in the crypto market.
Full story
Perception is a funny thing.
If it was 110f degrees (43c) outside and we told you:
“Good news, it doesn’t get any hotter than this!”
You may feel relieved… but if we told you:
“It won’t get cooler yet; in fact, temperatures will remain at these levels for quite some time.”
It would probably just add to your stress levels.
The crazy thing is: we would essentially be delivering the same message.
A similar perception trick is at play in the market’s reaction to Federal Reserve rate hikes.
A few months ago, the market was overjoyed to hear that interest rates would not be increased further. But now the market is concerned that rates are not about to be cut.
Same message, different response.
Okay, so what does this have to do with crypto?
Well, all markets need new money to keep prices rising.
Interest rates are currently the highest in more than a decade, meaning the investing public is spending more on loan payments than they have in a long time.
More money tied up in loan payments = less money to invest.
Rumors of a Bitcoin ETF (also known as a way to trade BTC on the stock market) have pushed Bitcoin’s market capitalization up significantly over the past week…
But as these rumors start to die down, the market is now looking for new sources of information implying that ‘a new injection of cash is imminent!’.
One hope was that it would be found in the mud potential of lowered interest rates sometime in the next six to 12 months, but the Fed is remaining painfully tight-lipped.
The moral of the story: If the ETF news doesn’t make headway, we might have to wait a while for the next price pump in the crypto market.