The cryptocurrency market has made significant gains recently, and its value seems to have exceeded dollar liquidity for the first time. In other words, the cryptocurrency market is now worth more than all the dollars in people's hands.
According to the Wall Street Journal , the market value of cryptocurrencies reached $ 2 trillion on May 29, to intersect with the value of all dollar liquidity. Estimates now show that the market value of cryptocurrencies has reached $ 2.25 trillion, more than the value of dollars in the market.
Although this is a significant achievement at first glance, signaling a dramatic increase in the popularity of cryptocurrencies, it can also be a bit misleading because the liquidity of the US dollar is not the same as all available dollars. Liquidity means the money that is in the hands of the people.
Just as money in your pocket does not represent all of your assets, so the liquidity of the dollar does not represent the full market value of the dollar. Many intangible investments and assets affect the overall value of this fiat currency. Thus, although the market value of cryptocurrencies has exceeded the liquidity of the dollar, it has not yet surpassed the overall value of the dollar.
On the other hand, those familiar with the history of economics find many similarities between the status quo and previous bubbles. The stock price has reached its highest point since the .com bubble in 2000. House prices have returned to pre-crisis levels. High-risk companies are able to borrow at the lowest interest rates, and real investors have diverted their money to clean energy and cryptocurrencies.
Of course, various explanations such as significant advances in digital commerce can be considered effective in this growth. However, many analysts believe that the current market is bubbling and the main reason is the Federal Reserve. The system has kept interest rates close to zero for the past year, declaring that rates will not change for at least two years.
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