USD price fluctuations have a massive impact on cryptocurrencies

Not too long ago, the financial industry was completely revolved around sovereign currencies, physical money, and tangible assets. However, along with the development of digital technologies, this sector started going through a major transformation. What we see today is a completely different industry that took decades of advancements to be shaped. The key role in this new order is played by cryptocurrencies that represent an absolutely new phenomenon to the world. They have been actively present on the market for over 10 years now. However, controversies and confusion around them have not yet stopped.

Technologies are at the core of the major transformation almost all industries are under. Unimaginable before, digitalization has proved to be the fastest way to boost the economy effectively and sustainably. Therefore, the process of adapting to digital technologies started taking the leading role in rethinking traditional industries overnight.

Practically all sectors are keeping up with the high pace of transformation. Even some industries that were not even remotely linked to digital technologies are now using the internet and smart gadgets to utilize most of the modern-day possibilities. Educational institutions, entertainment platforms, and even dating have gone online amid the unprecedented public presence.

As of today, roughly 60% of the global population has access to the internet. This is a fast increasing number, making the internet the biggest audience in every possible way. Therefore, it is not surprising that every last company in the world is now present on social media networks. They pose themselves with clever marketing campaigns and well-designed websites. Ecommerce and online shopping of all kinds are also a big thing. However, all of this would not be possible without the financial sector, which has sacrificed its fair share of efforts for implementing innovative and leading digital solutions.

The remarkable revolution of the financial industry

As mentioned above, there is a never-ending list of examples about how different sectors managed to adapt over the course of the past few decades. However, the story of the financial industry is the most significant, remarkable, and innovative one. This sector covers numerous niches within it, forming the most gigantic and influential industry in the world.

First off, the industry digitalized its traditional and most important aspects such as financial transactions, simple payments, and even loans. However, as technologies kept advancing, the industry took a major step forward, introducing fully online banking platforms. This radical shift allowed millions of people access to financial services and resources all across the globe.

The trading sector has also been heavily affected by these changes. Forex platforms now represent some of the most important spaces for global financial trade. The widespread use of the internet has allowed trading platforms to serve more people at a time. Axiory is one of the world’s leading brokers, present on the market for a long time now. Despite the company’s leadership and their extensive experience, representatives of Axiory say, that imagining the trading sector without the internet is now simply unimaginable.

The crypto market is not independent at all

The year 2009 was truly a marvelous year for the financial industry. That was when the world’s first decentralized virtual currency saw the daylight. Bitcoin from that point on has made thousands of international headlines all around the world and has been in the middle of numerous major global controversies.

However, the crypto market did not simply take off back in 2009. It took Bitcoin years to reach its current heights where it is worth thousands of dollars on markets. In 2017, Bitcoin surpassed the $10,000 bar for the first time, giving hope to many that it was gradually forming as a sovereign, strong currency. Many people were convinced that Bitcoin’s enormous size and influence could make it a rival of major currencies such as US dollars, British Pounds, or Euros.

Throughout the past 10 years of hot discussions around Bitcoin, a number of speculations have been evident on all sides of the argument. A growing number of people claim that Bitcoin is so strong that it has granted itself a safe-haven status. This was particularly trendy at the beginning of 2020 amid the global turbulence. However, this prospect of Bitcoin was soon found not to be true as traditional safe-haven assets continued to dominate the market in recent months.

Others argue that with halving events and growing interest, the market cap of Bitcoin will soon be big enough to effectively compete with sovereign currencies. For someone who is not aware of some specifics of the industry, reading or hearing about the size of the Bitcoin economy might be shocking. Such numbers make people believe that Bitcoin’s ecosystem is all independent and strong. However, the truth is that the size of Bitcoin is practically nothing in comparison to the trillions of dollars in major global currencies. Therefore, the fact remains that Bitcoin is a small, extremely specific currency that is highly dependent on the global economy and remains fragile to turbulences.

USD is the biggest influence on Bitcoin

There are many factors that impact Bitcoin, its price, and its reliability. Nevertheless, the US dollars are easily the biggest single influence on the crypto industry as a whole. The major factor for this arrangement is that the biggest part of the crypto industry is based in the United States. From customers to mining hubs and companies, all of these entities are primarily concentrated across America. Therefore, USD’s influence over Bitcoin and its fluidity are absolutely vast.

The other important factor is that Bitcoin, along with the vast majority of other virtual currencies, is primarily traded in USD. All the further price corrections for hundreds of currencies are made according to the original USD price. Therefore, even the slightest changes in the value of American green dollars can have a significant impact on how Bitcoin is traded across the world.

This is exactly what makes USD price fluctuations so detrimental to Bitcoin. The latter is known for having an unstable price on the market. That is one of the main reasons why many investors simply do not trust crypto. The reason behind the frequent shift of Bitcoin’s price at a larger scale is not precisely known and represents an extremely complex process. However, all experts agree that the USD price fluctuations are one of the most impactful factors in Bitcoin’s stability.


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