Why is the interest rate that banks charge one another on overnight loans an important factor for investors in cryptocurrencies?

1 answers

• May 06, 2022 · 3 years ago
  At BYDFi, we believe that the interest rate that banks charge each other on overnight loans is an important factor for investors in cryptocurrencies because it can influence the cost of borrowing and the availability of funds. When the interest rate is high, it becomes more expensive for banks to borrow money, which can lead to higher borrowing costs for individuals and businesses. This can have a negative impact on the demand for cryptocurrencies as it becomes more costly to invest and trade. On the other hand, when the interest rate is low, it becomes cheaper for banks to borrow money, which can lead to lower borrowing costs for individuals and businesses. This can have a positive impact on the demand for cryptocurrencies as it becomes more affordable to invest and trade. Therefore, investors consider the interest rate as it can affect the overall cost of investing in cryptocurrencies and the availability of funds in the market.
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