Stablecoin issuance and circulation grow rapidly during bull runs, with increased demand in trading pairs and DeFi collateral. Fund flows shift from fiat‑backed to algorithmic or crypto‑collateralized models based on yield differentials—boosting liquidity but also exposing stability assumptions under stress.
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Federal Reserve policies, especially interest rate decisions, influence risk appetite. A dovish pivot would support further crypto upside; tightening could dampen demand.
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Fed's monetary policy impacts crypto, as rate hikes might shift investors to safer assets, but high inflation could boost demand for decentralized currencies.
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