In the era of global markets, any economic event has the potential to impact the entire financial system. Cryptocurrencies have no borders, so this phenomenon is even more relevant for them. Let’s take a look at how economic factors in different parts of the planet have affected the price of the main digital currency.
Since the start of September, Bitcoin has been extremely volatile. In the first few days of the fall, the coin reached its monthly maximum at $10 896, which was followed by a precipitous drop to $7833 by the end of the month. In October, the situation started to improve, with Bitcoin overcoming the $8557 level, but this was followed by another decrease. These dramatic changes were influenced by economic and political news from all around the globe.
United States and America
In September, the US Federal Reserve decided to inject $278.2 billion of liquidity into the banking system. As a result, there was a shortage of funds in the market, leading to an increase in interbank lending rates. In the past, the Central Bank had purchased securities to decrease pressure in the market. Media sources have described this process as ‘pumping’ the financial system with dollars.
Similar processes always lead to increased control from financial regulators. That’s why many investors have grown to fear investments in Bitcoin. Meanwhile, private traders from Argentina and Venezuela have entered the market, thus boosting the price of the currency.
The conflict between the SEC and Telegram might have also influenced the market. As you may recall, the SEC had previously suspended the ICO and demanded a total ban on the Gram cryptocurrency.
In the end of September, German Finance Minister Olaf Scholz commented on the government’s new blockchain strategy. In an interview with Сointelegraph, Scholz said that authorities in Germany do not intend to give away control over the currency’s issuing to private business, announcing measures to prevent the development of stablecoins in Germany. French Finance Minister Bruno Le Maire shares this point of view in expressing his concerns about Facebook Libra. Authorities in the Netherlands also consider digital currencies to be potentially risky, and they have already started working on national cryptocurrency legislation.
The drop in the pound-to-dollar exchange rate has impacted the volatility of the British currency. This was good news for the crypto industry, resulting in an increase in the price of Bitcoin.
The Chinese yuan has joined the British pound in its descent. As a result of the currency’s decrease in September, many investors started purchasing Bitcoin instead. Demand for the cryptocurrency boosted its price. The US-China trade war is cited as the main reason for the drop in the price of the yuan.