What is Interest rate?
The central-bank policy rate; higher rates tend to pull money out of risk assets.
Policy rates set the return on cash. When they rise, holding a volatile asset costs more in opportunity terms, which is why crypto has historically traded badly in tightening cycles.
Rate expectations move markets as much as decisions. A pause that was already priced in changes nothing; a surprise shifts everything.
Related terms
- Risk-on / risk-offMacro
Whether investors are adding or removing risk; crypto usually trades as a risk asset.
- Liquidity cycleMacro
The broad expansion and contraction of money available to risk assets.
- InflationMacro
The rate at which prices rise, and the reason 'hard-capped supply' is a selling point.