How does the definition of M3 money supply relate to the valuation of digital currencies?
Mohamed Ait kajateDec 27, 2021 · 3 years ago1 answers
Can you explain the relationship between the definition of M3 money supply and the valuation of digital currencies in detail? How does the M3 money supply affect the value of digital currencies?
1 answers
- Dec 27, 2021 · 3 years agoThe definition of M3 money supply is an important factor to consider when analyzing the valuation of digital currencies. M3 money supply includes physical currency, demand deposits, time deposits, and other liquid assets. The amount of money in circulation affects the overall economic conditions, including inflation and deflation. Inflation can erode the value of traditional currencies and increase the demand for digital currencies as a hedge against inflation. On the other hand, deflation can increase the value of traditional currencies and potentially decrease the demand for digital currencies. Therefore, changes in the definition of M3 money supply can indirectly impact the valuation of digital currencies by influencing the overall economic environment in which they operate.
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