U.S. Fed's Rate Pause Boosts Crypto Stocks, Sparks Optimism for Market Growth in 2024
Summary:
The U.S. Federal Reserve's decision to pause interest rate hikes, with an outlook for reductions next year, is predicted to have a positive impact on cryptocurrencies and relevant stocks. Following the news, companies including Coinbase and MicroStrategy reported significant stock gains. With BlackRock and Fidelity considering Bitcoin ETFs, more traditional financial institutions are expected to tap into the crypto market. Despite the favorable predictions, Apollo Crypto's Henrik Andersson warns of potential impact on real-world asset tokenization due to lower interest rates. The incoming Bitcoin halving in April 2024 is also anticipated to boost the overall crypto market growth.
The U.S. Federal Reserve's decision to hold off on increasing interest rates, with potential reductions on the horizon for next year, is predicted to provide an uplifting effect on cryptocurrency and digital asset stocks. Blackrock's fund manager, Jeffrey Rosenberg, stated in an interview with Bloomberg on December 13th that the halt in the rate hike, along with the possibility of future rate cuts, is beneficial news for investors. As a result, the S&P 500 saw a 1.37% surge following the announcement. Rosenberg opined that this wave of optimism could last until new economic data is released, indicating that the Federal Reserve is open to easing financial conditions. The news has already led to a sizeable uptick in crypto-related stocks, with companies like Coinbase (COIN) and MicroStrategy (MSTR) noticing 7.8% and 5% spikes in their shares, respectively, while Bitcoin mining company Marathon Digital (MARA) leaped 12.6%.
Apollo Crypto's chief investment officer, Henrik Andersson, told Cointelegraph that the standstill and future reduced rates likely indicate an encouraging push for cryptocurrencies and corresponding stocks. He said, "With the potential of companies like BlackRock and Fidelity introducing Bitcoin ETFs, we're likely to see a considerable number of traditional financial institutions breaking into the crypto market." In recent times, blockchain equities recorded their highest weekly inflows, with an impressive $126 million invested into crypto-focused stocks, according to CoinShares' report dated December 11th. The same report divulged the continuation of an 11-week streak of investments into digital assets, showing another $43 million worth of weekly gains.
CMC Markets' market analyst, Tina Teng, stated to Cointelegraph that the decision by the Federal Reserve to maintain interest rates will undoubtedly further invigorate the market's appetite for crypto commodities. Teng shared her belief that the pivot has not only amplified the eagerness for risks but also enhanced the predictability for future liquidity conditions, therefore promoting crypto assets alike. Investors, she said, might witness bullish trends akin to previous rate-cut cycles, likely intensified by institutional interest for the upcoming Bitcoin ETFs, with a judgment due in early January. However, Andersson warns that lower rates might impact the real-world asset (RWA) tokenization story, given that an increase in DeFi yields may appear more appealing to investors in a low-rate landscape. Meanwhile, Teng and Andersson both anticipate the scheduled Bitcoin halving in April of next year to strongly boost the total growth of the crypto market in 2024.
Published At
12/14/2023 8:11:29 AM
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