When the news says “The Fed raised rates,” why does the stock market crash? It’s because interest rates are the price of money.
When you borrow money to buy a house, you pay interest.
When a business borrows money to build a factory, they pay interest.
Low interest rates act like a drug. When money is cheap to borrow, everyone buys houses and stocks. Prices go up. The economy feels great.
High interest rates are the withdrawal. When money is expensive, buying stops. Prices fall. The economy slows down.
Central banks use interest rates to manipulate the economy. They lower them to stimulate growth and raise them to fight inflation.
But this constant manipulation creates “boom and bust” cycles. It makes it hard for you to plan your future because you don’t know what the rate will be next year.
Bitcoin doesn’t have a central interest rate. The “price” of money is determined by the free market, not a committee.