Joey Segura
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Mar 29, 2024
Inflation is still here - what does that mean for crypto?
If you're still confused about how the whole "inflation vs. interest rates" thing works (like I was), allow me to break it down for you:
When the U.S. Federal Reserve (FED) raises interest rates, it becomes more expensive to borrow money, which generally leads to a decrease in consumer spending and ultimately lower inflation as the price of goods shrinks to meet decreased demand.
With inflation not coming down as quickly as many people thought, the FED has hinted that they may not reduce interest rates as quickly as they had previously expected, leaving rates at 5.25-5.5%.
When interest rates are high, people tend to pull back on risk-on investments like crypto. With this uncertainty, more volatility follows.
If interest rates come down, the general consensus is that risk-on investments become more attractive, but timing your buys on the "general consensus" can be a risky game.
That’s why speculating on crypto can be so tricky. What many don’t realize, is that if you’re in for the long haul, you can stake your crypto and earn rewards while you wait for the rising tide. Because nothing is worth being all-in on cash when you favorite coin starts to pump.
You can wait around trying to time the market, or you can stake and earn rewards from the fees generated by day traders swapping back and forth.
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