Coinbase Suggests FED Could Unexpectedly Slash Interest Rates: Potential Boost for Cryptocurrencies
In a landscape where numerous cryptocurrency ventures heavily rely on artificial intelligence (AI), the surge in AI development has triggered intensified competition for processing chips. Nevertheless, according to Coinbase research analysts David Duong and David Han, the impact of AI and technology-induced efficiency improvements could surprisingly lead to a reduction in inflation, subsequently influencing interest rates and potentially driving interest towards riskier assets like crypto.
The analysts expressed their belief that the disinflationary impact of AI and technology-driven productivity gains will persist in curbing inflation throughout the year, as outlined in a recent report. Furthermore, they indicated that these AI-fueled efficiencies, in addition to mounting pressure for monetary easing in the US, may pave the way for earlier and more aggressive interest rate cuts than previously suggested by the FED.
Once the rate cuts kick in, the analysts anticipate a positive ripple effect on both stocks and cryptocurrencies, as it could prompt a shift of capital from money market funds, which currently hold $6.4 trillion, towards other asset classes. However, they emphasized that their insights should not be construed as investment advice.
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