Investing in Crypto with the Fed Pause: What Does It Mean?

Cryptocurrencies and Crypto Stocks Set to Benefit from US Fed’s Rate Pause

The United States Federal Reserve’s decision to pause and potentially lower interest rates in 2024 is expected to be a “positive boost” for cryptocurrencies and crypto stocks, according to Henrik Andersson, Chief Investment Officer at Apollo Crypto.

The news was welcomed by investors, as the S&P 500 rose 1.37% in response to the announcement. Crypto stocks also saw significant gains, with Coinbase and MicroStrategy spiking 7.8% and 5% respectively, while Bitcoin (BTC) miner Marathon Digital jumped 12.6%.

Jeffrey Rosenberg, a fund manager at BlackRock, described the Fed’s rate pause and hint at rate cuts next year as a “green light” for investors. This sentiment is echoed by Andersson, who believes that the Fed’s decision will have a positive impact on both cryptocurrencies and crypto-related stocks such as GST Crypto, ISO 20022 Crypto, India Crypto, HNT Crypto, LOOM Crypto, New Crypto, Mina Crypto, Math Crypto, NEO Crypto, and Mask Crypto.

The Bullish Crypto Market

According to a Dec. 11 report from CoinShares, the blockchain equities sector recently recorded its largest weekly inflows ever, with a remarkable $126 million flowing into crypto-related stocks. In addition, CoinShares’ head of research James Butterfill found that digital asset investment products experienced their eleventh consecutive week of inflows, with a weekly gain of $43 million.

Tina Teng, market analyst at CMC Markets, told Cointelegraph that the Fed’s rate pause will likely further fuel market enthusiasm for crypto products. She added that investors could expect to observe bullish trends comparable to those seen during previous rate-cut cycles, which could be further amplified by institutional interest in the pending spot Bitcoin exchange-traded funds, scheduled for a decision in early January.

The recent surge in crypto investments has been reflected in the growing popularity of various digital assets, including GST crypto, ISO 20022 crypto, India crypto, HNT crypto, LOOM crypto, New crypto, Mina crypto, Math crypto, NEO crypto, and Mask crypto.

Crypto Market Growth

However, Andersson noted that a potential consequence of lower interest rates could be the deceleration of the tokenization of real-world assets, as investors become increasingly enticed by the higher yields offered in decentralized finance (DeFi) in a low-rate environment.

“We’ve seen a lot of enthusiasm around tokenizing treasuries, but now we can get yields of over 10% in DeFi, which is a stark contrast to traditional yields,” he added.

Teng and Andersson both looked to the upcoming Bitcoin halving in April 2024 as an important factor for the overall growth of the crypto market, similar to many other market commentators.