Inflation is on the rise. It's just the beginning.
---POSSIBLE POSITIVE EFFECTS
1. Hedge against inflation (theoretically)
Some cryptocurrencies, especially Bitcoin, are presented as a store of value similar to gold, due to their limited supply (21 million).
In countries with high inflation or devaluation (such as Argentina, Venezuela, or Turkey), many people buy cryptocurrencies to protect their purchasing power.
2. Distrust in fiat currencies
If inflation gets out of hand, people could lose confidence in traditional currencies (dollars, euros, pesos, etc.) and seek decentralized alternatives.
This may increase demand for cryptocurrencies.
---POSSIBLE NEGATIVE EFFECTS
1. Tighter monetary policies
To combat inflation, central banks often raise interest rates.
Higher rates make risky assets, such as cryptocurrencies, less attractive, as investors prefer safer investments (such as Treasury bonds).
2. Less liquidity in the markets
With inflation and high rates, there is less money available to invest in speculative assets.
This can lead to declines in the price of cryptocurrencies, especially in smaller tokens or those with weak fundamentals.
3. Volatility
In contexts of high inflation and economic uncertainty, market volatility increases, and cryptocurrencies, already volatile, can experience significant increases or decreases.
BE CAREFUL.....!!!
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