Does the USD Performance Affect BTC Exchange Rate?
The appearance of cryptocurrencies and Bitcoin have changed the financial world dramatically. The idea of having a decentralized currency where people would be able to conduct financial transactions without complications was appealing to everyone and in the recent decade, cryptos gained a foothold even more actively in our everyday lives.
There are various factors that have an impact on cryptocurrencies and Bitcoin (we mentioned Bitcoin separately because it is without a doubt the most used currency among cryptos). Factors vary from general financial news to a particular currency, but in this article, we will mainly talk about the USD’s influence on the BTC exchange rate.
A cheap dollar helps BTC grow
According to 55brokers, the dollar is getting cheaper - there are a number of reasons for this: from the presidential elections, which should take place in the fall, to a new round of confrontation between the United States and China. They call it the new Cold War. The conflict between the two countries quickly turns into an acute phase - it is no longer about trade relations, it has become deeper and affects territorial disputes and diplomatic relations.
On the one hand - all this plays into the hands of Donald Trump - there is nothing better before the elections than a big external enemy and a cheap dollar, which will help fulfill another part of the president's election promises to return enterprises to the United States. Also, the depreciating dollar will help make exported American goods more competitive in the global market.
Based on remarks from FXTM Nigeria, a fall in the dollar almost always causes a rise in the price of gold and other precious metals, which can serve as defensive assets, but raw materials usually grow at times more than a fall in the currency. This was mostly based on the time when Nigerians quickly swarmed cryptocurrencies as a means of distancing themselves from both the USD and gold as safe havens. Such a situation already existed at the beginning of this century, when the fall of the USD provoked the growth of oil 14 times, and gold - 4 times.
Some of the shares have signs of overbought - we can even talk about a new bubble in the sector of technology companies. Classic and non-classic defensive assets are growing - gold has renewed historical highs, Bitcoin adds and again costs more than $10 thousand. This is also happening against the background of a weakening of the correlation between the stock and cryptocurrency markets - after the March collapse, it was the crypto market that was recovering faster, it seems that some investors appreciated this factor.
The performance of the dollar has great implications on the BTC. As we know it is a virtual currency and any kind of fluctuation in the dollar affects greatly the world’s largest cryptocurrency. When it is falling the price of Bitcoin usually goes up and when it is rising the situation is vice versa. At the present moment, the price of Bitcoin exceeded $11,000 but it is not the last straw yet and there is more to come in the future.
You can find our original post on our blog here: https://btcupload.com/latest-cryptocurrency-news/does-the-usd-performance-affect-btc-exchange-rate