The euro’s falling towards 1 dollar for the first time in 20 years cryptocurrency is turning its investors’ attention to the impact of the exchange rate on crypto valuations and Euro-based stablecoins.
With the emergence of stablecoins for currencies other than the US dollar in recent years, the world of foreign exchange has slowly started to enter the digital asset markets.
Some Experts Say The Euro’s Fall Cryptocurrency Market and Thinks It Will Put Pressure On Euro-Based Coins
Some observers are seeing the euro’s recent decline. Bitcoin (BTC) He says it could put bearish pressure on the market and affect demand for euro-pegged stablecoins.
Noelle Acheson, head of market insights at crypto trading firm Genesis Global Trading, said:
“As currency market participants view the US dollar as the ‘least risky’ currency, currency fluctuations (as currently experienced by the euro and others) often work out in favor of the US dollar.
This becomes even more evident with the different interest rate routes between the US and the EU. Therefore, the recent development may negatively affect the Bitcoin price in dollar terms, which has been negatively correlated with the dollar index for several years.”
The euro has lost 10% against the dollar this year, a significant move for major fiat currency pairs. The exchange rate was last traded around 1.02 or 200 pips below the 1.00 par level.
The decline seems to have resulted from the European Central Bank’s (ECB) lagging behind the Fed in tightening monetary policy despite rising inflation, the threat of a major energy crisis in the European Union, and recession fears.
Gregory Klumov, CEO of the stablecoin platform Stasis, evaluated the issue as follows:
“There are obvious risks these days, such as a recession and the restriction of excessive dollar margin funding from the securities markets. When this happens, all borrowers buy dollars to repay their loans to increase their returns and increase their exposure to risky assets.
When this happens, all borrowers buy dollars to repay their loans to increase their returns and increase their exposure to risky assets. Therefore, when assets are sold and funding returns, the dollar strengthens. The Euro is no exception in this case.”
*Not investment advice.