A senior market analyst at eToro, Mati Greenspan, recently produced a commentary on cryptocurrency market. He argued that the recent market decline is a product of the strengthening US dollar.
 
As the dollar continued to perform well in recent weeks, fuelled by policies tightening the economy with the intention of preventing high inflation, the economies of emerging markets struggled to maintain the strength of their own currencies. Greenspan believes this has affected cryptocurrencies in the same way.
 
In the commentary that was shared with CCN, Greenspan compared the movements in the crypto market with those of local fiat currencies in emerging markets, noting that they mirror one another. While investors in these markets are choosing to invest in cryptocurrencies when their local currency is on the decline, Greenspan said that the US dollar is still the most popular reserve currency of choice.
 
His analysis suggests that many smaller economies rely on a stable exchange rate with the dollar, something threatened by its current appreciation. Additionally, because of its movements, there is less incentive for investors to move their capital into the digital currency market.
 
The value of cryptocurrencies is often regarded as unassociated with the movements of traditional commodities such as gold and oil. But in this case, they have been fluctuating in the same ways, in reaction to the surging dollar. It is common for these commodities to lose value in the face of the increasing dollar value. The digital currency market has followed suit this time.
 
As the past several days have seen the movement of the dollar slow down, currencies such as the lira, rand, and peso have begun to recover. As Greenspan’s analysis would suggest, so has the cryptocurrency market. Market capitalization hit USD 216 billion Friday from a Monday total of USD 190 billion.
 
An alternative analysis of the decline from Arthur Hayes, CEO of cryptocurrency derivatives exchange BitMEX, suggested that ICO-funded startups were cashing out capital before losing any more in another market dip.
Follow BitcoinNews.com on Twitter at @BitcoinNewsCom

Telegram Alerts from BitcoinNews.com at https://t.me/bconews

Image Courtesy: Pixabay
Comments are closed.

Check Also

Leading Crypto News Site CCN Shuts Down

One of the top blockchain and cryptocurrency news websites, CCN yesterday announced it wou…