Macroeconomic Factors that Impact the Crypto Market

From monetary to fiscal policy and covid-19, macroeconomics impact the crypto space. This report reveals the mechanisms.

This report will guide you through the macroeconomic factors that impact crypto and is part of a series of white papers on Macroeconomy and Bitcoin.

Key Takeaways

• Monetary policy is the action by which the central bank influences a nation’s total money supply. Typically, expansionary monetary policy has a positive impact on crypto market, while contractionary monetary policy is the opposite.
• Fiscal policy is the action by which the government influences a nation’s aggregate demand. Typically, expansionary fiscal policy has a positive impact on crypto market, while contractionary fiscal policy is the opposite.
• Covid-19 is positively correlated with crypto market. On the one hand, when the pandemic becomes more severe, people have a higher expectation for expansionary policies. On the other hand, the pandemic injects volatility into stock market, and crypto market is an imperfect substitute.
• Typically, the asset market is positively correlated with the crypto market, while interest rates and USD index are negatively correlated with the crypto market. The correlation of inflation rate and crypto market is not obvious, but a high inflation rate can cause crypto market to fall as the contractionary expectation increase.

Read the full version of the Macroeconomic Factors that Impact Crypto Market here.