The European Central Bank (ECB) has taken an important step by reducing the deposit rate to 2%, a 25 basis point decrease from before, fully in line with market expectations. This move marks the 7th consecutive time ECB has cut interest rates, affirming its monetary policy loosening stance in the Eurozone amid ongoing global economic uncertainties.
Alongside adjusting the deposit rate, ECB also lowered the key refinancing Capital rate from 2.4% to 2.15% and the marginal lending rate from 2.65% to 2.4%. This adjustment indicates ECB is seeking to promote economic growth by reducing borrowing costs for financial institutions and businesses, while simultaneously supporting liquidation in the banking system.
This interest rate reduction strongly impacts the cryptocurrency market, especially as capital flows tend to seek alternative assets to optimize investment performance. With traditional interest rates declining, the attractiveness of higher-risk assets like cryptocurrencies increases significantly, driving funds into top coins and potential DeFi projects.
From a macroeconomic perspective, the ECB's move signals an expansionary monetary policy cycle that could create momentum for a new investment wave in the digital financial market. Investors need to carefully consider the interplay between inflation volatility, economic growth, and the increasing appeal of cryptocurrencies in a prolonged low-interest-rate environment.
