By Darth001 
The U.S. interest rate has a strong influence on Bitcoin and other financial assets. But why?
To understand this in a simple way, let’s compare it to something from everyday life: buying a
house with a loan
This directly affects the money available in the market and the attractiveness of investments.
The Role of Interest Rates
The Federal Reserve (Fed), which is the central bank of the U.S., can raise or lower
interest rates to control the economy. If inflation is high, it increases interest rates to slow
down spending. If the economy is weak, it lowers interest rates to encourage investments.
This directly affects the money available in the market and the attractiveness of investments.
Bitcoin and Interest Rates: A Simple Example
Imagine you want to buy a house and need a loan.
1.Low Interest Rate Scenario
○ The bank offers a loan with very low interest rates. The monthly payments are
affordable, and many people take advantage of this to buy houses.
○ With more money circulating, people also invest more in assets like Bitcoin.
○ The result? Higher demand for Bitcoin, and its price rises.
2.High Interest Rate Scenario
○ Now, the bank increases interest rates. The monthly payments become
expensive, and fewer people buy houses.
○ The same happens with investments: when interest rates are high, many
investors prefer government bonds, which offer good returns with low risk.
○ The result? Less money flowing into Bitcoin, and its price drops.
Bitcoin and Interest Rate Cycles
In recent years, we’ve seen this relationship in action:
✔️ 2020-2021: The Fed kept interest rates near 0% to boost the economy. The result?
Bitcoin skyrocketed, reaching $69,000.
❌ 2022-2023: To fight inflation, the Fed raised interest rates. This pushed investors away
from Bitcoin, which dropped below $20,000.
Now, the market expects the Fed to start lowering interest rates again between 2024 and
- This could fuel a new Bitcoin bull run.
Just as interest rates affect your decision to take out a home loan, they also influence where
big investors put their money.
✅ Low interest rates → More money in the market → Bitcoin rises 📈
❌ High interest rates → Investors prefer safer options → Bitcoin falls 📉
Keeping an eye on the Fed’s decisions can help predict Bitcoin’s movements in the coming
years.