The Impact Of Economic Indicators On Cryptocurrency
Economic indicators on the cryptocurrencies
In recent years, the increase in cryptocurrencies in recent years has been a significant phenomenon and prices varied wildly between days and weeks. Although many people consider cryptocurrencies to be a speculative market, there is increasing evidence of evidence that the economic indicators used to evaluate their value may have a significant impact on their price movement.
In this article, we explore the commitment between financial indicators and cryptocurrency prices and review some of the most important trends that show how investors can use these factors to make conscious decisions that buy or sell cryptocurrencies.
What are the financial indicators?
Economic science is a measure of economic health assessment in national or markets. These include indicators such as GDP growth, inflation level, unemployment rate, interest and much more. These metrics help decision makers and companies understand the financial direction and make conscious decisions.
How do economic indicators affect the price of cryptocurrency?
The cryptocurrency is based on a decentralized system, where transactions are stored in the public main book called Blockchain. This technology enables peer -to -peer stores, such as banks that can make money laundering and other illegal activities easier.
However, the underlying economic indicators used to evaluate cryptocurrency prices do not always reflect the value of the cryptocurrency itself. Instead, they affect the overall mood of the market and the trust of investors.
Here are some of the most important ways of financial indicators that affect the prices of cryptocurrency:
1
GDP growth rate
: A strong growth rate of GDP can refer to a stable economy, leading to the demand for cryptocurrencies such as Bitcoin (BTC). In contrast, slow or decreased GDP growth rate can lead to lower prices.
- Inflation levels : High inflation levels can reduce consumer purchasing power by reducing demand for cryptocurrency. On the other hand, low inflation shows that the economy is growing slowly and that it could benefit from higher prices of cryptocurrency.
3
Unemployment rate : Low unemployment can refer to strong labor markets, which can lead to higher investors’ confidence and thus the higher prices of cryptocurrency.
- Interest : Interest can affect demand for cryptocurrencies such as Bitcoin (BTC). Higher interest rates can reduce demand, while lower interest rates can increase it.
Examples of economic indicators affecting the prices of cryptocurrency
1
2020 Global Kid-19 Pandemic : Pandemia caused widespread and economic contraction, leading to a significant reduction in cryptocurrency prices.
2
2018 US CHanoan Trade War : The US -China Trade War caused Chinese import tariffs that adversely influenced the global market and influenced cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH).
3
2019 Global Economic Aid : The slowdown in the global economy led to a reduction in investors’ confidence, which led to the prices of cryptocurrency.
Investors’ feelings and cryptocurrency prices
Investors’ attitudes in cryptocurrency are also influenced by financial indicators. For example:
1
Sentime Analysis : Investors use the emotional analysis tools to evaluate general opinion on cryptocurrency, such as Bitcoin (BTC) and Ethereum (ETH). A strong positive mood can lead to higher prices, while negative mood can lead to lower prices.
- Institutional investments : Institutional investors such as risk investment funds and pension funds have a significant impact on the cryptocurrency market. They often follow financial indicators that can influence their investment decisions.