Normally, raising interest rates makes a currency stronger.
Yes, hence pulling money out of other asset classes like stocks and arguably bitcoin, all things being equal. I doubt there's much of an effect for bitcoin, if any, but if there was it would be in that direction.
If people's savings can keep pace with inflation (which is also usually held back by high rates) by normal deposit account savings, then why risk it in shares?
Stocks are more popular when money is cheap, but saving doesn't pay much as investors are desperate to get returns that low bank rates will not supply.
Low rates encourage higher risk savings to look more appealing, so higher rates (ordinarily) should discourage riskier investments - such as (arguably) Bitcoin.
This is of course classical economic theory - and often money markets, savers, investors and borrowers don't know enough about the theory to do what it says they should
I thought this was exactly my point! Falling stock prices would generally correlate with a fall in bitcoin, under this theory. In practice I doubt bitcoin traders are a large enough and homogenous enough group for that to hold true.
I wasn't really disagreeing with you, just saying what interest rate rises would normally be expected to do to economic activity in different asset classes. I was 'elaborating' as Lauda asked..
To be honest Honey Badger has been looking such a good buy of late - stock market falls may bring
more money into BTC - I mean, we just went over 1250 - so economic theory ain't much help.
Let's face it, we cannot recall too many economists predicting the banking crash, can we - on the other hand Satoshi's white paper was timed just right for it.
Bitcoin is perhaps more likely to behave as a commodity, more like gold. Gold (in theory) should go down as federal bonds etc pay more - so there is an opportunity cost to holding an asset that pays no interest.
However the last four recorded Fed interest rate hikes have seen gold go up, not down.
So theories are meaningless!
Destination moon?
