Negative Interest Rates: The biggest driver of crypto adoption

We have seen the interest rates go as low as 0%, but things are changing slowly for many global economies. We have seen a trend of negative interest rates in the game, and it has already happened in the European Central Bank(ECB), France, Germany, and Japan.

The central banks introduce these negative interest rates to prime the economy of their nation. The reason to do this is to make investors take some loss on the investments and help them park the keep their funds someplace safe. According to them, they get back the dollars or euros or yen they invest once the currency is circulated and jump-starts the spending and economy.

At times like the Great Recession, the banks only lend to those organizations that already have the money they need. Majority of companies need capital to spend which they are not able to find. This capital helps in jump-starting the economy, so banks find alternate ways to help them.

The negative interest rates make sovereign bonds an ugly investment for people and banks promote the investors to invest in riskier assets. These investments are stocks, corporate bonds, and other assets that can help smaller companies to spend that money.

In a situation like this, investing in cryptocurrencies will be considered as a more sensible investment as its a part of the riskier assets, but we have seen the prices fluctuate from low to high within days. Banks have started paying people to hold money like the banks are paying money to people to borrow the money from them. This move will leave no option for people but to invest in crypto for a better return on the investments.

Vineet Chaudhary
Vineet Chaudhary
Vineet Chaudhary is a content writer with computer applications as his background field. His interests range from writing and photography to going out for trips and rides on weekends.

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