In times of global volatility and uncertainty, what follows is that people approach safety. In today’s economy, crypto is not a very safe asset. As a result, whenever the world feels insecure, investments are moved away from risky assets. and significantly reduce the value of crypto.
Cryptocurrency is known as digital currency. In November 2021, it was valued at more than 2 million baht, and it took only half a year for the price to drop to less than a million baht, just 888,362 baht on June 13, 2022, which analysts said had not yet reached its lowest point. In other words, crypto will have a lower value.
This directly affects the confidence in risky assets like crypto that have not yet been accepted without any complaints, causing the world to turn to secure assets such as gold and the US dollar. Therefore, investments were moved to these assets. We can see this from the higher values of the US dollar and gold. And more importantly, when inflation is high, there is a high chance that the Fed will raise interest rates to pull money out of the system to decrease inflation.
will directly affect bond yields over time. We will see yields continue to increase. And it is expected to rise further as the FED raises interest rates, pulling back the liquidity that has been injected since the coronavirus.
First of all, the main reasons for inflation are so widespread. This is due to a huge increase in energy prices. Russia is the third largest oil producer and exporter in the world. When Russia’s halt in world energy supply has resulted in a huge loss in output. This will increase the price of oil and increase the cost of energy for businesses and services as well, directly affecting the price of goods and inevitably causing higher inflation. It can be seen that the ongoing war between the two countries has a huge impact on people around the world as well. Not just the crypto world.
However, in the future, we may see the return of higher crypto prices again after every country around the world deals with the primary cause of inflation.
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