Cryptocurrency, the link with the US dollar

La market capitalization it currently stands below $ 200 billion. And, basically, nobody knows for sure what will happen at virtual currencies, with long-term investors and market analysts having a variety of opinions as to why the market has shrunk by nearly $ 800 billion from all-time highs, no later than a little less than a year ago.

Although it will not be the main element of influence, one thing is certain: like any reference currency, also the cryptocurrency will suffer the impacts of the US dollar, which currently suffers from a number of negative influences. Among the various:

  • a trade war involving the United States and China;
  • Brexit;
  • the crisis between Russia and Ukraine;
  • oil towards a new minimum level;
  • foreign buyers have left the US real estate market and the 2019 seems less comforting to the sellers;
  • the Federal Reserve which is raising interest rates;
  • unsustainable global debt levels (US interest payments are $ 500 billion on its debt);
  • companies that are closing factories, firing workers and not starting new projects;
  • a possible recession in the 2019.

The above leads to negative pressures on any investment linked to the US dollar. As highlighted by NASDAQ, the index went from $ 8.100 on August 31 to $ 6.983 on Friday November 23. Additionally, Bitcoin went from $ 6.900 to $ 4.300 in the same period.

However, in all this round of risk factors, it should also be remembered that investors do not always make rational decisions. The technology behind cryptocurrency is unlike anything else on the market today, and some short-term investors are essentially looking for earnings based on fiat currencies rather than investments in cryptocurrency.