The Impact of Interest Rate Increase on Cryptocurrency Industry

03/09/2023 23:19 • Tech Trends • 84 views

21:00-7:00 Key words: interest rate increase, Silvergate, Mt.Gox, Voyager

Overview of important developments overnight on March 9

Analysis based on this information:

The cryptocurrency industry has been experiencing numerous ups and downs in recent times. As of today, the industry has received an important message from the Federal Reserve of the United States. The message highlights a significant increase in the interest rate for the first time since the pandemic breakout. The interest rate rise by the Federal Reserve will impact the cryptocurrency industry in many ways.

Firstly, Silvergate, one of the most significant banks for cryptocurrency, will be affected by the interest rate increase. Silvergate operates as the primary financial institution and provides banking services to various cryptocurrency businesses worldwide. With the increment on the interest rate, such businesses will experience a rise in borrowing costs, leading to increased trading fees and transaction expenses.

Secondly, a rate increase will positively impact Mt.Gox, which is a bankrupt cryptocurrency exchange company. The company used to run one of the most significant cryptocurrency exchanges before it was hacked resulting in a loss of approximately $473 million worth of digital currency. The increment of the interest rate will lead to a surge in the value of the Japanese Yen, which will positively impact the payout of the company’s creditors.

Thirdly, Voyager, a leading cryptocurrency broker, will be negatively impacted by the interest rate increment. The increase will lead to decreased home-mortgage refinancing, and therefore reduce the amount of business that Voyager gets. It is worth noting that Voyager operates in the retail sector, and its primary source of passive income is through margin-lending to its customers. An interest rate rise will negatively affect the company’s performance.

In conclusion, the rise in the interest rate by the Federal Reserve will have a considerable impact on the cryptocurrency industry. The decision will affect various cryptocurrency businesses, either negatively or positively. It is crucial to note that the cryptocurrency industry is highly volatile, and it is subject to various external factors such as regulations and changes in the economy, which makes it difficult to predict its future.

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The Impact of Interest Rate Increase on Cryptocurrency Industry

Overview of important developments overnight on March 9

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