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Dollar's Devaluation And Bitcoin's Price Rise: Know The Correlations

03 Feb 2021 Developer News
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The devaluation of the dollar prices in the previous year and the rise in Cryptocurrency’s Bitcoins price have several reasons that many of us are not aware of adequately. The lockdown issue and the COVID-19 pandemic in 2020 collapsed the economies of many countries.

Many additional factors have resulted in the devaluation of the dollar prices and increased Bitcoin prices. You must know the main reasons for the dollar’s depreciation to help you grow your business in the best possible manner. The scenario at that time is explained at from where you can get more information.

Reasons For The Devaluation of  Dollar And Appreciation Of Bitcoin Prices  

There are multiple reasons for the dollar’s devaluation and the increase in the prices of Bitcoins. Therefore, if we can understand the main reasons for the currency’s devaluation, it can help you.     

1. Monetary Policy  

The Federal Reserve of the USA resulted in lowering the interest rates. It was done to increase the investments in stocks and other bonds. On the other hand, the dollar princes were going down.

The prices of Bitcoin were rising high at the same time due to investors’ less interest in investing their money in Dollars.

You must be well aware that the COVID -19 Situation has made the investors think about alternative options other than fiat currencies to earn higher returns.

The best option for them to invest in Bitcoin seems to be the ideal COVID-19 situation.

2. The Rate Of Inflation   

Inflation increases the prices of the products and services it results in a fall in demand. It has also reduced the dollar prices exchange rate. On the other hand, the need for Bitcoin prices has risen.  

Bitcoin was not affected due to the market inflation rate; its prices are growing, and the investors were getting the required returns as expected. This contrast of the situation makes the devaluation of the dollar prices and increase of Bitcoin prices.    

3. Demand For Currency

The demand for the currency stays healthy when it is in high demand but becomes weak when its demands fall. A similar kind of situation crops up in 2020. The demand for the dollar keeps falling, and the Bitcoin investors got more leverages that resulted in the price hike of Bitcoin.  

The demand factor of Bitcoin makes it more challenging for the dollar to compete with it. On the other hand, China’s influence in growing the Yuan’s value resulted in its dollar prices’ downfall.  

4. Slowing The Growth Rate  

The declining growth of many corporate organizations resulted in lowering the profitability of the business. It ultimately resulted in the shift of investors’ interest to make their investment in the dollars.  

On the other hand, the prices of Bitcoins are increasing steadily as Bitcoin prices are not dependent on corporate profitability, so the investor’s investment interest has also shifted in it. You must develop the proper investment planning to make your investments in Bitcoin.

5. Falling In Export Prices

When the export prices, fall then it results in the devaluation of the currency. During the COVID-19 pandemic, the USA’s export prices fell drastically, resulting in a fall in the dollar prices. 

Bitcoin is not affected by the fall of the export prices. It is the main reason why Bitcoin prices are creeping drastically over the years. Investors were shifting their attention to invest their money in Bitcoin.   


Hence, if you are confused about why the dollar prices have fallen, this article can give you the right answer. If you plan to invest your money in Bitcoin or any other Cryptocurrency, you must consider the current market scenario properly.  

The considerations of the current market prices will play a vital role in developing your currency. You cannot make your investment decisions without being rational in it. You must consider several crucial points in the light of this matter to make the correct decisions.

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