Binance CEO Richard Teng: The expectation of interest rate cuts will have a significant impact on the prices of crypto assets

ChainCatcher news, Binance CEO Richard Teng commented on the expectations of interest rate cuts, stating, "We expect that the expectations of interest rate cuts will have a significant impact on the prices of crypto assets. Lower interest rates enhance the liquidity of the financial system, thereby boosting the demand for high-yield, high-risk assets, including cryptocurrencies. For example, from February 2020 to February 2022, when interest rates were near zero, the price of Bitcoin increased by 375%.

Lower interest rates may raise concerns about inflation, prompting some investors to turn to cryptocurrencies to protect their purchasing power; low rates may also weaken the dollar, leading more investors to view crypto assets as an alternative store of value. Bitcoin and other crypto assets have unique characteristics that may influence their prospects during periods of interest rate cuts. One key factor to consider is the recent Bitcoin halving, as historically, price increases have generally occurred 6-18 months after similar events. The launch of spot ETFs could also facilitate easier transitions between stocks and cryptocurrencies, allowing the liquidity growth brought by interest rate cuts to flow into the crypto market.

Moreover, while September is typically a weak month for crypto assets, prices usually begin to rebound in October, and the expectations of interest rate cuts may provide additional momentum as prices recover. The impact of the Federal Reserve's interest rate cuts on the crypto asset market remains uncertain, but several indicators suggest that the policy changes in September may be timely for cryptocurrency investors. Lower borrowing costs and increased liquidity present a hopeful outlook for crypto assets. Historical trends and unique cryptocurrency-specific variables further enhance optimism that these policy changes could foster growth."