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How economic events changed the course of Bitcoin

The shortage of dollars in the financial market. The enormous volatility of the British pound. The tighter regulation of the European Union’s cryptocurrencies. These points are just a few of the recent developments that may have affected the value of the main digital coin. Bitcoin has been in an extremely unstable position since early autumn, starting early September at $9536.

Desmond O'Flynn

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The shortage of dollars in the financial market. The enormous volatility of the British pound. The tighter regulation of the European Union’s cryptocurrencies. These points are just a few of the recent developments that may have affected the value of the main digital coin Bitcoin.

Bitcoin as an unstable position

Bitcoin has been in an extremely unstable position since early autumn starting early September at $9536. Six days later the coin reached its monthly peak of $10,896. Then the asset rate began to decline. The last day of the month BTC showed the minimum monthly price of $7833. In early October it seemed that the situation was improving.

The first cryptocurrency rose above $8323. Then it overcame the figure of $8557. However, the coin failed to hold this position for a long time. Economic and political world events may have caused sharp fluctuations in the exchange rate of the first cryptocurrency.

Woman covering her eyes with Bitcoin
Bitcoin has been in an extremely unstable position since early autumn. (Source)

United States of America

In mid-September, the U.S. Federal Reserve increased its cash supply by providing banks with additional liquidity of $278.2 billion. This came after the so-called “nightly repurchase transaction”. The Central bank tried to ease the pressure on the markets by buying treasuries and other securities.

This is in order to “pump” money into the system and prevent an increase in borrowing costs above the Fed’s target range. After CNN’s publication appeared, the state’s budget had more and more new dollars. This was literally from the air. It would seem, how does this apply to Bitcoin?

Europe

The Libra project from Facebook had an indirect impact on the course of the first cryptocurrency. It also had a direct impact on the behavior of European regulators. At the end of September, Sointelegraph published a statement by German Finance Minister Olaf Scholz. He said that the key element of state sovereignty is the issue of currency. It means that the country’s authorities will not give it to private companies.

It was an explanation of why Angela Merkel’s office approved a new blockchain strategy. The main purpose of this is to prevent the excessive development of stablecoins in the country. Authorities fear that digital assets may become a viable alternative to public currencies. An interesting coincidence is that the day after the German blockchain strategy was approved, the rate of the first cryptocurrency fell sharply from $10,217 to $9869.

French Finance Minister Bruno Le Mayor also believes that Libra is threatening the financial sovereignty of different countries. At the same time, he sees the benefit of the cryptocurrency. He also believes that it is necessary to create a public digital coin. This will become a weapon against the asset from Facebook.

Bitcoin in a physical representation
The Libra project from Facebook had an indirect impact on the course of the first cryptocurrency. (Source)

China

The rise in the cost of Bitcoin in early September was also attributed to the weakening of the Chinese yuan. The first cryptocurrency became a risk hedging instrument for many Chinese people. Its price rose sharply on the local stock exchanges.

Factors such as the ongoing trade war with the U.S. and the easing of monetary policy by the country’s central bank contributed to the depreciation of CNY/USD. In addition, the status of a legal and secure virtual asset has increased the interest of Chinese investors in Bitcoin.

(Featured image by Markus Spiske)

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First published in rbc, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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Desmond O’Flynn believes in minimalism and the power of beer. As a young reporter for some of the largest national publications, he has lived in the world of finance and investing for nearly three decades. He has since included world politics and the global economy in his portfolio. He also writes about entrepreneurs and small businesses, as well as innovation in fintech, gambling, and cannabis industries.