How do Central Banks actually affect the crypto market?

Question

Alright, I need someone to explain this in simple terms. I keep hearing that "central bank decisions" move crypto prices, but how? Aren't they supposed to be separate worlds?

Answer 1

Great question! It's all about money flow and investor psychology. When central banks (like the Fed or ECB) raise interest rates, it makes traditional investments like bonds more attractive. This can pull money out of risky assets like crypto. The opposite happens when they cut rates or print money (quantitative easing) – that cheap money often flows into crypto, pushing prices up.I found this guide on Paybis that breaks down the role of a central bank really clearly: https://paybis.com/blog/glossary/central-bank/
It helped me connect the dots between their policies on inflation, currency value, and why the crypto market often reacts so strongly to their announcements.