Macroeconomic Developments Affecting Crypto
Recent macroeconomic developments in the world have influenced crypto significantly. The US dollar has been growing in value compared to other currencies since October 2021, despite high inflation rates in the US. This growth is due to the US’s hawkish approach in raising interest rates and combating inflation, which threatens crypto prices as the dollar increases in value. However, some centralized currencies have been dropping in value, while most cryptos and Bitcoin have remained stable over the last few months.
Bitcoin Trading Volume and Regulation
Bitcoin trading volume has increased, reaching its highest level since June 14th, during the recent economic downturn. Despite the price being relatively low, this uptrend in volume indicates more people are buying Bitcoin for the long term, even in tough economic times. However, it also means people are still selling Bitcoin, albeit positively, showing continued interest in trading Bitcoin.
Regulation is one of the key points in crypto, not just for Bitcoin. CNBC recently discussed whether Bitcoin is a security or a commodity, which is essential to understand for crypto regulation. There is a need for cash authority to oversee Ether’s cash market and other commodities. However, it is challenging to determine what is a security or a commodity in this new asset class, and traditional asset classes’ 70-year-old case law is relied upon. This uncertainty is creating difficulties in regulating crypto, and two regulators are working together to find a reasonable outcome that will create certainty for the market and customer protection.
Conclusion
Crypto remains an exciting and volatile investment space, with macroeconomic developments and regulatory uncertainty affecting its growth. The recent increase in Bitcoin trading volume is a positive indicator of continued interest and adoption of crypto, but its price remains unstable. Understanding the macroeconomic landscape and regulations around crypto will help investors navigate this space effectively. Remember to do your research before investing and take advice from professional financial advisors.
