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📌 First: What happens when America prints dollars?
Increased dollar supply → means more dollars in the market.
This often leads to inflation (meaning a decrease in the value of the dollar).
Investors are starting to look for safe havens to protect the value of their money.
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📌 So what is the relationship of cryptocurrencies with this?
1. Bitcoin, for example, is considered "digital gold."
So if the dollar loses its value, many people convert their money to Bitcoin to preserve its value.
2. Increased liquidity in the market.
When there are a lot of dollars, there are people with extra money to invest... and sometimes they go to crypto.
3. The psychological link between the dollar and cryptocurrencies.
The more people lose confidence in fiat currencies, the more they trust decentralized currencies like Bitcoin and Ethereum.
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📉 But!
Printing dollars doesn't always mean a rise in cryptocurrencies... why?
Sometimes there is an increase in interest rates from the Federal Reserve (to address the inflation caused by printing), which makes people withdraw their money from the market and go for safe investments (like bonds).
This could cause a temporary drop in cryptocurrencies.
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🔁 Summary of the relationship:
Printing dollars = potential inflation = a shift towards cryptocurrencies as a hedge.
But the market's reaction depends on how much
interest rates, general sentiments, and market news.