It is no longer news that there's inflation and economic meltdown across the globe resulting from the COVID-19 PANDEMIC AND RUSSIAN/ UKRAINE WAR. Most developing countries are badly affected by the inflation. Inflation is the progressive increase in the prices of goods and services. The situation is that bad that many citizens are migrating to other countries with a little bit better economy.
Cryptocurrency investment has gained popularity over the years since the birth of Bitcoin which is the first cryptocurrency. Cryptocurrency has proved itself has a good investment despite its high volatility rate.
what are the effects inflation has on Cryptocurrency ?
Firstly , inflation has contributed to Cryptocurrency investors. With inflation , there is reduction in the purchasing power of fiat currency as its value has reduced drastically. This has encouraged many people to look for alternatives way to get extra income to meet up with the highly demanding cost of living. People are also looking for ways to be financially free and stable which is making more people have interest in investing in cryptocurrency because it is free from external control
In addition, inflation can also add value to Cryptocurrency. It raises the prices of cryptocurrency. The more there are investors, who are looking for crypto to buy and invest, the more the prices move up and really benefits previous investors who are in possession of the cryptocurrency.
Furthermore, inflation can also help to birth new cryptocurrencies or tokens. It can also bring about new technology in the cryptocurrency. There would be introduction of new coins into the market to give alternatives to investors who can not to afford to buy the already expensive cryptocurrencies which prices has shoot up due to flooding of investors. Also, there might be new technology for transferring cryptocurrency, selling or holding it
In conclusion,
inflation doesn't really have a negative impact on cryptocurrency. That's why its usually used as an hedge In controlling inflation in any economy.
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