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How can the price of lumber futures affect the value of digital currencies?

avatarTurkiSQDec 26, 2021 · 3 years ago1 answers

How does the fluctuation in lumber futures prices impact the valuation of digital currencies?

How can the price of lumber futures affect the value of digital currencies?

1 answers

  • avatarDec 26, 2021 · 3 years ago
    The price of lumber futures can indirectly affect the value of digital currencies. Lumber is a crucial raw material in the construction industry, and changes in its price can influence construction costs. When lumber prices rise, it becomes more expensive to build houses and infrastructure, which can lead to higher inflation. Inflation erodes the purchasing power of fiat currencies, making digital currencies a more attractive alternative for investors seeking to preserve their wealth. Consequently, the demand for digital currencies may increase, driving up their value. Conversely, if lumber prices decrease, construction costs may go down, potentially reducing inflationary pressures and dampening the demand for digital currencies.