ROLE OF CRYPTOCURRENCY AND STOCK IN THE REAL-WORLD ECONOMY
The cryptocurrency market is a big fintech development that works with exchanges and plays an important role as a trading mechanism. Following its rapid turn of events and extension, virtual money has gained a unique role in the global money markets. In 2018, the cryptocurrency market reached a market capitalisation of $139 billion, with over 250,000 daily trades. The cryptocurrency market offers a wide range of appealing investment opportunities that are projected to influence stock market performance. Three key elements influence the stock market: fundamental, macroeconomic, and institutional forces.
One of the primary reasons for cryptocurrency's uncontrolled growth is because it is not supervised by any governing authority, such as Central Banks (or any other banks), until a transaction is confirmed. Such digital currencies are an ideal alternative to national currencies because of their decentralized network structure, which employs a peer-to-peer payment network based on blockchain technology (fiat money). Blockchain technology provides a cryptographic protocol framework to create new units and protect all ongoing transactions.
Fiat money, which is sensitive to inflation, monetary and fiscal policy, is plainly avoided by investors. As a result, investors are seeking sanctuary in Bitcoin and other cryptocurrencies. Firms with bitcoin exposure are in high demand due to the rising demand for cryptocurrencies. If the value of cryptocurrencies continues to climb, these companies will witness a boom in significant stock purchases.
The difference in the nature of two occurrences explains why there is such a small link between cryptocurrency and traditional markets. The whole Bitcoin infrastructure remains operational, relying only on itself. The price of a bitcoin was not conceptually linked to real-world economic variables. It was a distinct closed market in and of itself. The only thing that was identical was the law of supply and demand, as well as all of its variants. The trading tool BTC/USD provided a subtle connection between the two worlds (including a stablecoin). On the one hand, its "self-sufficient" character suggests that the bitcoin market was operating more or less autonomously, but on the other side, it became the target of speculative manipulation.
Most investors nowadays just log on to a digital exchange, brokerage account, smartphone application, or other online platform to engage with financial markets. Most stock and cryptocurrency platforms offer a comparable user experience in terms of structure, order-book-based liquidity mechanisms, and trading alternatives. Buying and selling stocks has never been easier, and cryptocurrency exchanges have made trading in digital assets as simple as investing in traditional markets.