How does the fluctuation of the real currency affect the value of Bitcoin?

3 answers

• Jan 12, 2022 · 3 years ago
  The fluctuation of real currencies, such as the US dollar or the Euro, can have a significant impact on the value of Bitcoin. When traditional currencies experience a decline in value, investors may seek alternative assets to protect their wealth. Bitcoin, being a decentralized digital currency, is often seen as a safe haven during times of economic uncertainty. As a result, increased demand for Bitcoin can drive up its value. Conversely, if traditional currencies strengthen, investors may be less inclined to invest in Bitcoin, leading to a decrease in its value.
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• Jan 12, 2022 · 3 years ago
  Currency fluctuations can also affect the value of Bitcoin through exchange rates. Bitcoin is often traded against major fiat currencies on various cryptocurrency exchanges. When the value of a particular fiat currency decreases relative to Bitcoin, the exchange rate for that currency pair will change, resulting in a higher price for Bitcoin in that currency. This can attract more buyers and increase the demand for Bitcoin, thus driving up its value. On the other hand, if the value of a fiat currency strengthens, the exchange rate will adjust accordingly, potentially decreasing the price of Bitcoin in that currency.
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• Jan 12, 2022 · 3 years ago
  From my experience at BYDFi, we've observed that the fluctuation of real currencies can have a direct impact on the value of Bitcoin. When traditional currencies experience volatility, we often see an increase in trading volume and price volatility in the Bitcoin market. This can be attributed to investors diversifying their portfolios and seeking alternative investments. However, it's important to note that Bitcoin's value is also influenced by various other factors, such as market sentiment, regulatory developments, and technological advancements in the cryptocurrency space.
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