Historically, high interest rates do not favor risky assets like cryptocurrencies, as investors tend to opt for safer securities like Treasury bonds.
ANDl Bitcoin (BTC) shows signs of recovery at the close of a week that was mostly unfavorable. The leading cryptocurrency records an increase of 1.2% in the last 24 hours, once again approaching the US$67,000 after several days of sharp falls.
However, the situation is bleaker for ‘altcoins’. Ethereum (ETH) falls just over 1%, falling below $3,300, while Solana (SOL) experiences a loss of more than 5%, and Avalanche (AVAX) and Dogecoin (DOGE) 3% respectively. In contrast, tokens like Toncoin (TON) and XRP are showing positive momentum, the latter boosted by the announcement that Ripple will launch its own dollar-pegged stablecoin.
This positive movement in Bitcoin occurs after an apparent change in tone by the Federal Reserve (Fed) towards a more restrictive stance. Historically, high interest rates do not favor risky assets like cryptocurrencies, as investors typically opt for safer securities like Treasury bonds.
Bitcoin: what the market analyzes
Recently, several members of the US central bank have expressed doubts about the continuity of the scenario of three interest rate cuts planned for March. Neel Kashkari, president of the Minneapolis Fed, has been especially forceful in pointing out that such cuts may not be necessary if inflation remains stable.
Jerome Powell, chairman of the Fed, has also indicated that it is not appropriate to make changes until there is greater confidence that inflation will stabilize around 2%. In addition, Raphael Bostic, of the Atlanta Fed, has forecast a single rate cut in the fourth quarter.
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The March employment report, which will be released this Friday, will provide a clearer view of the Fed’s next decision and its future strategy. Around 200,000 jobs are expected to be created in the third month of the year, 75,000 less than in the previous month.
On the other hand, experts warn that BTC exchange-traded funds (ETF) momentum has slowed, suggesting possible profit taking. The market is also attentive to ‘halving’ of the Bitcoin blockchain scheduled for April, which could have an impact on cryptocurrency prices in the coming months, according to Matteo Greco, an analyst at Fineqia.
Source: Ambito
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