Dollar Devaluation
Definition: Dollar devaluation is the reduction in value of a currency relative to other currencies. It occurs when the country’s central bank lowers the price of its own currency by increasing the supply and thus reducing demand for it. This can be done through a variety of methods, including intervening in foreign exchange markets or adjusting interest rates.
Effects on Cryptocurrency Prices: The impact that dollar devaluation has on cryptocurrency prices depends largely upon how much influence national fiat currencies have over them as well as which cryptocurrencies one holds. Generally speaking, if you hold stablecoins such as USD Coin (USDC) then their values are likely to remain relatively unaffected; however, if you hold more decentralized coins like Bitcoin (BTC) or Ethereum (ETH), they may experience some degree of volatility due to market speculation concerning impending monetary policies and economic conditions related to dollar devaluations around the world. For example, when China announced plans last year to reduce their US dollar holdings—which would lead to an inevitable decline in its value—Bitcoin surged 11% within 24 hours following this news while Ether saw a 5% increase during that same period before eventually stabilizing again once fears had subsided about potential impacts these moves may have had on global markets overall
