How does the risk free rate affect the valuation of digital currencies?

1 answers

• Dec 25, 2021 · 3 years ago
  Ah, the risk free rate! It's like the North Star of digital currency valuation. When the risk free rate is low, it's like a green light for digital currencies. Investors see the potential for higher returns and flock to the market, driving up the valuation. But when the risk free rate is high, it's like a red light. Investors become more risk-averse and prefer safer investments. This can lead to a decrease in demand for digital currencies and a drop in their valuation. So, keep an eye on that risk free rate, it can be a game-changer for digital currencies!
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