Recent news in the cryptocurrency world shows that traders are concerned about the potential Fed rate cut in September.
Increase in Yields in Global Markets
The U.S. 30-year Treasury yield is close to 4.98%. In the U.K., this figure stands around 5.69%, France is at 4.5%, and Germany around 3.4%. These are high numbers compared to past years. When yields rise, investors earn a better return from bonds, making safe investments in government debt more attractive than risky bets in cryptocurrencies.
Global Conditions and Their Influence on the Crypto Market
Even if the Fed cuts rates, the European Central Bank may not follow suit. High inflation in Europe could cause monetary authorities to delay easing. This creates a situation where global capital continues to be directed towards safe assets, like bonds, which restrains the growth of cryptocurrencies.
Gold as a Safe Asset Gains Influence
Gold has been reaching new highs, indicating that investors are turning to safe assets. If the goal is to find safe investments, gold easily attracts capital, putting cryptocurrencies at a disadvantage. Current conditions indicate that the crypto market may face challenges until long-term yields decrease.
Thus, despite the expected Fed rate cut, the cryptocurrency market may face difficulties due to persistently high yields and investor preferences. The current volatility and high risks may not support growth, as investors remain cautious.
