Fed's Rate Pause Seen as a "Green Light" for Investors
The decision by the United States Fed to pause its interest rates and potentially lower them next year is expected to have a positive impact on cryptocurrencies and crypto stocks. In an interview with Bloomberg, Blackrock fund manager Jeffrey Rosenberg described the Fed's rate pause as a "green light" for investors, leading to a rally in the S&P 500. This bullish sentiment is expected to continue until new economic data emerges, indicating that the Fed is open to easing financial conditions.
Crypto Stocks Experience Significant Gains
The announcement from the Fed has also resulted in significant gains for crypto stocks. Shares of Coinbase and MicroStrategy spiked 7.8% and 5% respectively, while Bitcoin miner Marathon Digital jumped 12.6%.
Positive Boost for Cryptocurrencies and Crypto-related Stocks
Henrik Andersson, chief investment officer at investment fund Apollo Crypto, believes that the Fed's interest rate pause and the expectation of lower rates in the coming year will provide a positive boost for cryptocurrencies and crypto-related stocks. He expects that if major players like BlackRock and Fidelity launch Bitcoin ETFs, it will encourage other traditional financial institutions to enter the crypto markets.
Record Inflows for Blockchain Equities and Digital Asset Investment Products
Blockchain equities recently experienced their largest weekly inflows on record, with $126 million flowing into crypto-related stocks. Additionally, digital asset investment products saw their 11th straight week of inflows, gaining $43 million.
Market Enthusiasm for Crypto Products
Market analyst Tina Teng predicts that the Fed's rate pause will increase market enthusiasm for crypto products. The improved risk-on sentiment and expectations for future liquidity conditions will buoy crypto stocks in a similar manner.
Lower Interest Rates and the Cooling of Real-World Asset Tokenization
Lower interest rates could have a side effect of cooling the real-world asset tokenization narrative. As traditional yields head in the opposite direction, the attractiveness of generating over 10% yield in DeFi (Decentralized Finance) becomes more appealing to investors.
Bitcoin Halving as a Catalyst for Crypto Market Growth
Both Teng and Andersson see the upcoming Bitcoin halving, scheduled for April next year, as a major catalyst for overall crypto market growth in 2024.
