How is the current macroeconomic crisis affecting the cryptocurrency market?


changes like the rising interest rates in the United States and rising inflation have a direct effect on the crypto market, which itself is proving resilient.

Since its inception, cryptocurrencies, especially Bitcoinare considered a very promising technology because, among other reasons, they operate in a decentralized manner, more independent from more traditional economies.

However, this does not mean that the crypto market is totally disconnected from the economic landscape, be it on a small or large scale. If the volatility of cryptocurrencies this year shows us anything, it is that macroeconomic effects have a great influence on what happens in all types of investments.

Traditional investments and crypto market: what is the relationship?

Times of financial crisis like the one we are currently experiencing in several countries, such as USA Y Argentinaoften lead investors to withdraw capital from volatile investments to reallocate it to sources with a safer return, such as Treasury Direct, Bank Deposit Certificates (CDBs) and US fixed income securities, the so-called bonds.

This means a monetary loss on investments like traditional stocks, real estate funds, and of course cryptocurrencies. We have recently seen how the increase in interest rates in the United States after the announcement of the Federal Reserve which resulted in a change in the Consumer Price Index (CPI) caused immediate volatility in the value of bitcoin, even though the coin has recovered.

Much of this volatility is due to the relationship between bitcoin and the dollarone of the most important fiduciary currencies on the planet (if not the most important) and whose appreciation or devaluation has important consequences for the macroeconomic scenario, influencing the price not only of BTC, but also of countless financial assets, whether digital or not. .

On a more positive side, the “king of cryptocurrencies”, as I like to call him, has proven to be quite resilient, holding the 20k average amid this up and down streak. This shows the strength that bitcoin and the cryptocurrency market as a whole have been acquiring, but it is worth mentioning the caution, especially in this moment of uncertainty and global economic instability that we are experiencing, in which there is no way to predict a medium to long-term period in which it is safe to take on very risky investments. What do you think of the macroeconomic effects in the crypto market? Leave your comment on our networks.

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