How does the supply of a currency in international markets affect the value of digital currencies?

3 answers

• Nov 29, 2021 · 3 years ago
  Certainly! The supply of a currency in international markets can have a significant impact on the value of digital currencies. When the supply of a traditional currency increases, it can lead to a decrease in its value relative to digital currencies. This is because an increase in supply can result in inflation, which erodes the purchasing power of the currency. As a result, investors may seek alternative assets like digital currencies, which are often seen as a store of value and a hedge against inflation. This increased demand for digital currencies can drive up their value in international markets.
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• Nov 29, 2021 · 3 years ago
  The supply of a currency in international markets plays a crucial role in determining the value of digital currencies. When the supply of a traditional currency decreases, it can create a scarcity effect and increase its value relative to digital currencies. This is because a decrease in supply can lead to deflation, which increases the purchasing power of the currency. As a result, investors may prefer holding traditional currencies over digital currencies, leading to a decrease in demand for digital currencies and a potential decrease in their value in international markets.
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• Nov 29, 2021 · 3 years ago
  From BYDFi's perspective, the supply of a currency in international markets can impact the value of digital currencies in various ways. When the supply of a traditional currency increases, it can create a negative sentiment towards fiat currencies and drive investors towards digital currencies. This increased demand for digital currencies can drive up their value. On the other hand, if the supply of a traditional currency decreases, it can create a positive sentiment towards fiat currencies and potentially decrease the demand for digital currencies, leading to a decrease in their value. Overall, the supply dynamics of traditional currencies can have a ripple effect on the value of digital currencies in international markets.
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