Altcoins Talks - Cryptocurrency Forum
Cryptocurrency Ecosystem => DeFi tokens => Topic started by: Yamane_Keto on August 17, 2024, 02:44:19 PM
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The US Federal Reserve is expected to cut interest rates (at least once) in the next 4 months, which will lead to weaker yields on US Treasury bonds and thus more liquidity that could be invested in projects.
What are some of the possible outcomes of a rate cut? How will it affect DeFi token prices? Will it be one of the investments that will receive liquidity or will it have no impact?
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Investors looking for attractive yields could possibly look to DeFi as an alternative. I don’t expect DeFi tokens to suddenly start pumping. These tokens typically have high inflation and little utility. I do expect we will see higher TVLs across DeFi protocols and more trading activity on DEXs. This will lead to more fees for liquidity providers and greater revenue for protocols. Even if the price doesn’t pump for these tokens, the ones that share revenue with holders will still be seen as a good investment.
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Defi yields usually are bigger then what the banks has to offer, thats why Defi in general has soo many money locked into it.
I do remember talk about stablecoins and a person said his father is staking his savings into crypto because the yield are x2x4 what banks offers.
Rate cut will shake markets the same way it shaked when they started to raise, the difference is loans will get cheaper, soo potencial demand for cheap coin to invest might shake the markets into a good way, bringing back liquidity into the markets.
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Investors looking for attractive yields could possibly look to DeFi as an alternative.
In the event that Bitcoin may continue to rise and there are no signs of a clear correction with a high probability of recession, investing in DeFi will be risky even if interest rates are reduced.
Defi yields usually are bigger then what the banks has to offer, thats why Defi in general has soo many money locked into it.
Where do they get the cash to pay dividends to investors? In the past I thought they could get access to low interest loans and move the money around to pay dividends.
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I don't know if I'm wrong, but I have the impression that when US Treasury bond investors want to invest in another thing, like cryptos, they prefer BTC for the medium to long term
I don't think the treasury bond public is the same as the one that invests with the risk of DeFis (hack, risk of smart contracts, rug pull etc)
In addition to BTC, they can also invest in ETH, and with ETFs this audience should feel even safer about investing in cryptos
They'd rather invest in a blackrock than an AAVE, for example
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What are some of the possible outcomes of a rate cut? How will it affect DeFi token prices? Will it be one of the investments that will receive liquidity or will it have no impact?
If it's bitcoin, it's usually a positive effect but for DeFi tokens? I doubt that big investors would risk their money on less regulated platforms even if it offers higher interest rates. They will probably prefer putting money on pools offered by top centralized exchanges (CeFi).