It is challenging to know the reasons that result in the falling and rising of stocks within a lesser period. But one major factor involved might be involved, is a Federal Reserve that has been
It is challenging to know the reasons that result in the falling and rising of stocks within a lesser period. But one major factor involved might be involved, is a Federal Reserve that has been raising the interest rates. Economy experts have debated what impact of rising rates can cause to stocks and investors’ portfolio.
Why stocks go down when interest rates rise
When an interest rate increases, the cost of lending money increase, hence makes most people reluctant to loaning money to develop new projects.
Likewise, when bitcoin interest rates rise, most people will make an extra return on their funds by putting money in the bank due to high-interest rate yield. These two reason influence stock prices.
The slowdown of the economy
As interest rates go higher, to finance a new project will become much expensive; thus, most people will avoid developing the plan. Therefore, it will result in the economic downturn since the activities of the business as went down. It will make some investors sell their business fearing that they might experience losses due to interest rate changes.
What a risk-averse investor should do
It is advisable always to invest in bitcoin market but not just to buying or selling depending on predictions on if the market will go up or even down. According to economic research, to try to predict the market status is not wise. It is good to be safeguarded from a circumstance where a market goes down but still it participate in a various increase on the upside.