Why Bitcoin Was Sinking on Wednesday
One of the key market drivers for cryptocurrencies is interest rates. All things being equal, when they're on the way down, investors get more excited about digital coins and tokens. Conversely, when they stay level (or even rise) that sentiment can quickly turn negative.
On Wednesday the U.S. Federal Reserve (Fed) kept its key interest rates unchanged, and the latest economic data suggested there isn't much scope for cuts in the near future. So it wasn't surprising that the No. 1 cryptocurrency, Bitcoin (CRYPTO: BTC) led the way with a nearly 5% decline over the 24 hours prior to 4 PM Eastern time.
The interest rate calculation is a rather simple one; when rates go down, the yields of so-called "safe assets" like government bonds decline. This, in turn, makes riskier investments -- hello, cryptos! -- more appealing. Investors like the potential bounce they can offer, in favor of a predictable yield that's heading south.
Source Fool.com
