Crypto overcomes market circumstances to outperform the dollar
Cryptocurrencies and the U.S. dollar are vying for the title of the best-performing product as a result of persistent macroeconomic issues influencing many asset classes.
Since the end of June, the MVIS CryptoCompare Digital Assets 100 Index has registered an increase of 5.4%. During a period in which equities, bonds, commodities, and gold continue to decline, the Bloomberg Dollar Spot Index has reached a record high with a 7.2% increase.
Despite the fact that both cryptocurrencies and stocks have been affected by macroeconomic factors, the latter looks to have suffered the most. Notably, global central banks have escalated their monetary tightening in an effort to manage the growing inflation.
The good performance of the dollar is due to its reputation as an inflation-hedging currency. In addition, the dollar’s performance has persisted despite the Fed raising interest rates by 75 basis points at its third consecutive meeting.
Moreover, the extraordinary success of cryptocurrencies has been mostly driven by Ethereum’s (ETH) gains after the historic Merge upgrade. The upgrade has been seen as an optimistic indicator for the asset’s transition to the Proof-of-Stake (PoS) protocol.
After the notorious Terra (LUNA) ecosystem breakdown, the fortunes of the cryptocurrency market looked to diminish. The market’s enormous sell-offs were partially attributable to the market’s downfall.
“This recent performance may be an early indication that we are passed the infectious volatility caused by the Luna and crypto-lender collateral damage in the previous quarter,” said Kraken Australia’s managing director, Jonathon Miller.
Elsewhere, Bitcoin (BTC), which is key to determining the direction of the cryptocurrency market, struggles to prevent a further decline below $20,000. At the time of publication, the leading cryptocurrency was trading at $19,200, having gained over 2% over the previous 24 hours, while Ethereum was priced at $1,330.
Ethereum has had major price adjustments after the Merge upgrade since the event turned out to be a “buy the rumor, sell the news” event.