How does monthly SOFR affect the trading volume of digital currencies?

1 answers

• Dec 30, 2021 · 3 years ago
  The monthly SOFR has a direct impact on the trading volume of digital currencies. As a benchmark interest rate, changes in SOFR can affect the cost of borrowing and, consequently, the trading activity in the digital currency market. When SOFR increases, it can lead to higher borrowing costs, which may discourage some traders from participating in the market, resulting in a decrease in trading volume. Conversely, a decrease in SOFR can lower borrowing costs and incentivize more traders to enter the market, potentially increasing trading volume. It is worth noting that while SOFR is an important factor, other market forces such as market sentiment, regulatory developments, and technological advancements also influence the trading volume of digital currencies.
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