Coinbase analysts have presented a report on the cryptocurrency market, expressing their confidence in the long-term strength of digital assets.
The report considers three scenarios related to the actions of the US Federal Reserve: stopping interest rate hikes, a slight rate increase with further pause, and slowing rate growth with its further rise.
The analysts dismiss the possibility of a 50 basis point rate hike or a decrease in the rate. Regardless of the chosen scenario, the cryptocurrency market will benefit, according to Coinbase.
The first scenario involves the complete cessation of interest rate growth, which is unlikely given the current inflation rate.
If rates do not increase, loans in banks will cease to rise in price, which could lead to more Americans investing in cryptocurrency.
The second scenario is a slight rate increase with a further pause, which is more likely than the first scenario. In this case, the situation is similar to the first scenario, but with a delay.
The third and most likely scenario involves slowing rate growth with a further rise in interest rates.
This would allow the Fed to consolidate its progress in managing the banking crisis while addressing inflation.
In this scenario, it is possible that the cryptocurrency market could grow, especially for projects like Bitcoin, which are scheduled to have a halving in 2024.
The report dismisses the possibility of a rate decrease, as it is unlikely given the current high inflation rate.
The 50 basis point rate hike scenario is also unlikely, as it could lead to expensive loans and less enthusiasm for investing in high-risk assets like cryptocurrencies.
Overall, the Coinbase report presents a reasonable analysis of the cryptocurrency market in relation to the actions of the US Federal Reserve.