Crypto Market Growth and Cycles Outweigh Interest Rate Impact by 5x, Analyst Says

Market growth potential and internal cycles of virtual assets have a minimum fivefold greater influence on bullish trends than interest rate hikes, according to an analyst. The claim is based on instances where bull markets emerged despite rising or sustained high interest rates.

Jiang Zhuoer, founder of Levity Mining Pool, stated in a post on October 18 that 'the impact of interest rate increases on crypto bull markets is minimal, and the market's growth potential and internal cycles have at least a five-to-one effect compared to macro policies.' The statement was cited by Post News. Jiang noted that bullish markets occurred in 2013 and 2021 during periods of rising or high interest rates. In particular, he highlighted that in 2021, despite concurrent high interest rates and Federal Reserve balance sheet reduction, the market surged significantly.

He attributed this to the crypto market's strong growth potential, noting that market size can expand up to tenfold during a single bull run, making interest rate pressures relatively minor. He also compared market capitalization differences between crypto and U.S. stock markets, arguing that even a small portion of new funds flowing from U.S. stocks into crypto could offset the Federal Reserve's liquidity reduction effects.

Jiang cited annual growth rates of approximately 10% for U.S. markets versus over 50% for crypto markets, emphasizing that different market speeds mean similar interest rate changes can have varying impacts. The analysis focuses on viewing crypto's growth potential and cyclical movements alongside macro variables rather than excluding them. However, he noted that the market structures and capital flows in 2013 and 2021 may not be directly comparable.