What are the differences between overnight SOFR and term SOFR in the context of cryptocurrency?

1 answers

• Dec 28, 2021 · 3 years ago
  In the context of cryptocurrency, overnight SOFR and term SOFR can play a significant role in trading strategies. Overnight SOFR, being the interest rate for overnight borrowing and lending, can affect short-term trading decisions. Traders who are looking for quick profits may pay attention to overnight SOFR to gauge the cost of borrowing and lending in the short term. On the other hand, term SOFR, which represents borrowing and lending rates over a longer period of time, can influence long-term investment decisions. Traders who are planning for long-term positions may consider term SOFR to assess the cost of borrowing and lending over a longer period. It's important for cryptocurrency traders to understand these differences and incorporate them into their trading strategies to make more informed decisions.
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