US 10Y Treasuries reaches 4%. What is the impact on investments?

Hi HODLers and Hiveans,

For those only living in the CryptoWorld, this might seem like nothing but this is huge. Only a few years ago, we thought we would be sitting at 0% interest rates forever and that this would be "the new normal".

It is important because this is the basis for all kind of debt instruments and yield-bearing assets. This is the closest we have to the risk-free rate.

US 10Y Yield

Then other interests rates adjust on top of that. If you have a good credit score and want to borrow a house, you will pay the 4% + the delta of risk that the bank is taking by lending you money. Which is close to a total of 7% currently.

This has an impact on how much you can borrow, etc...

What is the impact to Crypto and Tech stocks?

When interest rates are high, you have a choice between investing in risky assets such as crypto/tech stocks and hoping they go up a lot or just putting this in cash and earning 4%. This was a choice investors DID NOT HAVE 2 years ago.

Also when valuing companies/crypto projects; the actualisation rate used has also increased making company's valuations lower.

As you divide the future valuation of X company by the actualisation rate, as this actualisation rate grows, your expected future value is getting lower. Therefore, a lot of investments do not make financial sense anymore.

There are many other things that will be affected by this but as a summary, the economu, stock market and asset prices will be negatively affected if interest rates continue to go up.

Stay safe out there,

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