Changes in fiscal policy may affect the virtual currency market
The rise in U.S. long-term Treasury yields and uncertainty in fiscal policy may impact the cryptocurrency market. Although virtual currencies have no direct connection to traditional financial markets, macroeconomic changes and capital flows may indirectly affect the performance of virtual currencies.
1. Rising interest rates and capital flows
The increase in U.S. Treasury yields may make traditional assets more attractive, leading to capital outflows from the cryptocurrency market, putting pressure on virtual currency prices. However, in times of economic uncertainty, virtual currencies may be seen as a safe-haven asset, attracting some capital inflows.
2. Fiscal policy and safe-haven demand
As the U.S. fiscal deficit expands, investors may seek assets with stronger inflation resistance, leading to a potential rise in demand for virtual currencies like Bitcoin as hedging tools.
3. Forex hedging costs and demand
Increased forex hedging costs may lead to capital outflows from the U.S., while virtual currencies, being global assets not affected by forex fluctuations, may attract more investors.
4. Investor sentiment and market volatility
Changes in U.S. fiscal policy may exacerbate market volatility, potentially putting pressure on virtual currency prices in the short term, but in the long run, virtual currencies may benefit from heightened uncertainty.
Changes in U.S. fiscal policy may lead to capital outflows from the cryptocurrency market, but as economic uncertainty increases, the demand for virtual currencies as safe-haven assets may rise, driving market growth.
