Hello dear friends and followers, the diverse and complex situations in macroeconomic terms that affect the conventional economic and financial structures, lead us to evaluate or rather put on the balance the inflationary effect of traditional banking against the effects of the deflationary system of Bitcoin, this in order to understand the current situation of international economic markets and the cryptocurrency market.
In recent months, as a result of the war between Russia and Ukraine, the world's economic and financial stability has become unbalanced, and if we add various macroeconomic factors to the demand and supply of traditional markets and the cryptocurrency market, we can see how the global economy is approaching a scenario of economic resection that is not at all favorable, but the question is: Can the Bitcoin deflationary system prevent the cryptocurrency market from falling into chaos?.
Before answering the question in the previous paragraph about whether; Bitcoin's deflationary system can prevent the cryptocurrency market from going into chaos, first consider that the cryptocurrency market was one of the markets that generated the highest returns during all the pandemic months of 2021, even delivering gains in excess of 1,000%.
As we all know, some time ago the cryptocurrency market operated independently from the conventional markets, but with the consolidation of the cryptocurrency market, and after having emerged from the most critical months of the pandemic caused by the new coronavirus, the relationship between the cryptocurrency market and the traditional economy has been getting closer, to the point of observing that everything that impacts the traditional market also has its correlation with the cryptocurrency market.
Now, beyond the correlation that has been accentuated between the traditional markets and the cryptocurrency market, let us keep in mind that there are notable differences between traditional economies and the cryptocurrency market, and the main difference is the inflationary effect of conventional monetary issuance versus the finite monetary issuance of the Bitcoin deflationary system.
Therefore, knowing how unstable the current macroeconomic situation is and how its inflationary effect increases the imbalance of the functioning system, it would be worthwhile to evaluate whether the price action of Bitcoin and the main cryptocurrencies in the following months will maintain a correlation with the traditional markets, or if on the contrary we will enter a new bullish momentum that will take us away from the current economic and financial chaos.
SOURCES CONSULTED
Cointelegraph News. Link
OBSERVATION:
The cover image was designed by the author: @lupafilotaxia, incorporating image: Clubswan
I think the reason why there is a correlation between crypto and traditional markets is that the nature of crypto investors has changed over the past few years with the entry of companies and hedge funds into BTC. This does not mean though that whatever happens to the traditional market can replicate in cryptocurrencies as there is no single entity printing money out of thin air!
Thanks for sharing :)
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Hi @qsyal
I liked this you said "However, this does not mean that whatever happens to the traditional market can be replicated in cryptocurrencies, as there is no single entity printing money out of thin air!", certainly there are conditions that end up differentiating financial markets and their pool of investors.
Best regards, be well.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Traditional currency not having a capped circulating supply is a problem inflating price of services today bitcoin solve this with it fix supply, although the unstable fluctuation of btc price is a concern for most investors leading to unnecessary market correlation of price i see at long run bitcoin will be a lasting solution thanks for the share.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
I think many people will accept that their fiat money will be devalued, finding a possible solution in cryptocurrencies, if bitcoin ends up having a user demand that exceeds the amount of bitcoin in circulation, then I think a bullish scenario for cryptocurrency prices is possible.
Greetings my friend and thanks for educating us on the economics of the greater cryptocurrency market.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit