Durham University: Fed’s Tighter Policy Reduces Profit From Crypto Assets

Specialists from the business school of the British Durham University believe that the monetary decisions of world regulators have little effect on the cryptocurrency market, with the exception of the US Federal Reserve.

The results of a study by scientists at Durham University they say that the side effects of changes in monetary policy have a low impact on the cryptocurrency market. The specialists concluded that the relationship between the yield of cryptocurrencies and spillovers of monetary policy was especially high when the level of interaction between the monetary regulators of the Eurozone countries, Japan, the UK and the USA decreased. The authors of the study argue that the pressure on the market has decreased throughout the process of changing the policy of the US Federal Reserve System (Fed), and has increased recently, when volatility returned to the cryptocurrency market.

According to the results of the study, there is a strong correlation between the profitability of Bitcoin, Litecoin and Ripple. Scientists argue that the monetary and political decisions of the countries with the largest economies in the world and the profitability of the cryptocurrency are practically unrelated. At the same time, the tightening of the Fed’s monetary policy reduces profits from crypto assets.

According to experts from a British university, in the conditions of low interest rates, investors prefer only profitable projects. But as lending rates rise, investors begin to diversify their portfolios. Ahmed H. Elsayed, a professor at Durham University Business School, noted that since the financial crisis, central banks in developed and emerging markets have adopted a number of unconventional monetary decisions:

“Our study shows that side effects from monetary policy changes do not affect the volatility of cryptocurrencies.”

At the same time, Bloomberg Intelligence analysts do not agree with British researchers, who argue that a change in global monetary policy has a negative impact on the cryptocurrency market.