According to new research, the euro and the US dollar pour significant effects on the movement of Bitcoin. But the top digital asset does not affect fiat currencies at all.
Bitcoin does not Affect Dollar and Euro
The research is conducted under the International Research Journal of Marketing & Economics, which studies the effects of fiat currencies over the price movements of Bitcoin but not vice versa. According to the study:
“USD prices can cause the movement of the Bitcoin prices, while the Bitcoin prices cannot cause the movement of USD prices. More so, Euro prices can cause the movement of Bitcoin while Bitcoin prices cannot cause the movement of Euro prices.”
The strong dollar means a decrease in the price value of Bitcoin because the digital asset came into the market to replace the traditional money. For instance, Bitcoin lost much of its value in 2018 when the US dollar tried to strengthen itself at that time. Similarly, when the dollar was in a weak position in 2017 the world’s leading cryptocurrency touched the all-time level of $20,000.
According to the International Research Journal of Marketing & Economics’s study, it is not yet known whether Bitcoin affects the fiat currencies or not. This is because Bitcoin is too weak now and has a low market, which can hardly hit traditional financial dominance.
The study also finds that euro weakness and strength also have influence over the movement of Bitcoin. But market analysts normally focus on the relationship between Bitcoin and the US dollar rather than Bitcoin and euro.
After the Coronavirus pandemic, the US government gave an announcement for the stimulus package. The surplus printing of cash money on the part of the Federal Reserve resulted in high inflation, which ultimately damaged the US dollar. As a result of the Fed’s policies, Bitcoin has attracted the attention of investors, which helped to push the price value upward. It is a result of institutional interest that Bitcoin reached close to$16,000, the highest position since January 2018.