Over the past two years, rising interest rates have had a significant impact on commodities such as stocks, cryptocurrencies, and oil.
Expectations for higher interest rates have been affecting markets for more than two years, reaching a key moment in mid-2023. The Federal Reserve kept them stable at eight of its last nine meetings, including the one held on June 12, after raising them 11 times during the last economic cycle.
Currently, few analysts doubt that interest rates will begin to decline, while inflation, which rose to 3.3% in May, continues to be tamed. Major asset classes reacted differently to higher interest rates.
Cryptocurrency prices fell along with other high-risk assets, while many commodities, including oil, rose in early 2022, although these increases were short-lived. As the increase in interest rates on Federal Reserve funds slowed down and then stopped in 2023, it appears that both oil and cryptocurrencies have stabilized.
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Additionally, cryptocurrency values fell along with other risky assets when the Federal Reserve announced its intention to raise interest rates in November 2021 and throughout 2022.
However, instability in the banking sector led many traders to turn to them, believing that future rate hikes would be less aggressive. As interest rates on 10-year government bonds peaked in October 2023 and subsequently declined, riskier assets became more expensive.
