Coinbase, a leading cryptocurrency platform, has made a bold claim suggesting that the Federal Reserve could unexpectedly make aggressive cuts to interest rates, which would have a positive impact on cryptocurrencies.
In a rapidly evolving landscape where many cryptocurrency projects are incorporating artificial intelligence (AI), the surge in AI development has intensified competition for processing chips. Despite this, Coinbase’s research analysts, David Duong and David Han, foresee a scenario where the disinflationary effects of AI and technological advancements will reduce inflation, leading to lower interest rates and a heightened interest in riskier assets like crypto.
The analysts state in a recent report that the ongoing trend of AI and technology-driven efficiency gains will likely continue to moderate inflation throughout the year. They also suggest that these AI-driven efficiencies, combined with growing political pressure for monetary easing in the US, could prompt the Fed to implement earlier and more aggressive interest rate cuts than previously anticipated.
According to Coinbase, once these rate cuts begin, it could serve as a positive catalyst for both traditional stocks and cryptocurrencies, as it may prompt a capital outflow from money market funds into other asset classes. This shift could potentially boost the appeal of cryptocurrencies as an alternative investment option.
It is important to note that this information is not intended as investment advice. For those interested in investing in over 300 cryptocurrencies, registering with Binance exchange through this link can avail a 20% commission discount.
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