Impact Pathways of Macroeconomic Expectations:
The outcomes of trade negotiations significantly affect macroeconomic expectations, which in turn influence the flow of funds in the cryptocurrency market. If there are major advancements in trade negotiations and the global economic outlook improves, the market becomes more willing to take risks, leading to increased funds flowing into traditional risk assets like stocks, while funds in the cryptocurrency market may decrease, potentially putting pressure on cryptocurrency prices. Conversely, if negotiations collapse, the market may fall into panic, with investors unwilling to take risks, causing chaotic fund flows in the cryptocurrency market. Without stable expectations to support it, cryptocurrency prices can fluctuate wildly, increasing the risk of extreme price swings.
Transmission Pathways of Market Volatility:
Factors such as geopolitical issues and trade negotiations lead to volatility in the gold futures market, and this volatility can affect the cryptocurrency market through interconnections with financial markets. The cryptocurrency market is inherently volatile, and when external market fluctuations intensify, investor sentiment is more easily impacted. Whether it is fear or optimism, emotions spread quickly, resulting in unusually active trading in the cryptocurrency market, with frequent shifts in buying and selling pressure. This further amplifies the volatility of cryptocurrency prices, making the market more unstable.
