The European Central Bank (ECB) has cut interest rates by another 25 basis points today, but the crypto market barely noticed. This indicates that the European market's influence on the crypto sector is declining compared to the US.
Meanwhile, the crypto community is praying for interest rate cuts in the US, and false tariff rumors have triggered a strong surge. These policies remain important, but Europe is gradually losing its macroeconomic influence.
ECB Cuts Interest Rates in a Context of Indifference to Cryptocurrency
Global recession fears are spreading across the crypto market, and regulation plays a crucial role. US investors have desperately been waiting for an interest rate cut, hoping it might bring a positive story.
Nothing has happened yet. However, the ECB has cut interest rates today for the sixth consecutive time, but the crypto market barely reacted.
"Growth prospects have deteriorated due to increasing trade tensions. Growing uncertainty is likely to reduce household and business confidence, and adverse market reactions and volatility to trade tensions are likely to tighten financial conditions," the ECB said in a public statement.
According to price data, the total crypto market Capital has decreased by 0.2% since the ECB announced these rate cuts. Among the top 10 assets, all increased in price today except one.
Does this mean macroeconomic factors are losing influence on the crypto market? That perspective is clearly incorrect. Less than two weeks ago, crypto experienced a strong surge after a false rumor that Trump would pause tariffs.
These profits returned when the pause actually occurred. Therefore, macroeconomic influence remains very strong in current markets; specifically, the ECB and Europe are losing influence.
The European Union is not the only economic bloc losing power in this space. Yesterday, the British government announced that inflation is lower than expected, potentially allowing another interest rate cut.
This also had minimal impact on crypto. Macroeconomic concerns still affect the crypto market, but its strongest connection is with the US and Asia.
A clear sign of this change in crypto occurred a few months before the ECB cut rates. Tether was forced to leave the EU due to MiCA regulations, but its business was minimally affected.
It remains the world's largest stablecoin despite losing the entire European market. In fact, since then, it has taken steps to better integrate with US regulations.
Meanwhile, many large crypto businesses are redirecting towards Asia and the US and moving away from Europe. Earlier this year, a16z closed its London office to focus on the US.
Tether moved to El Salvador, helping it be closer to the US and easily access the Latin American market. This growing region seems to offer more benefits than trying again in Europe.
The ECB's interest rate cut barely affects the crypto market, but that doesn't mean the industry will ignore the entire continent. However, in the future, EU activities will become increasingly less important to the largest companies.
This reflects broader trends as international Capital is redirecting away from Europe. Crypto is also part of that model.
