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Fundamentals drive price, before it's printed on the chart!
To understand how markets move, it's important to look beyond technical analysis and focus on the macroeconomic context and news events. Central bank policies can shape long-term trends and unexpected news events can cause short-term volatility.
By staying informed and understanding the macro context, traders can anticipate central bank policy shifts and identify opportunities for profitable trades.
When central banks tighten monetary policy, they reduce the supply of money by raising interest rates, making borrowing more expensive. This can have a negative impact on the price of cryptocurrencies and divert money away from riskier assets. Conversely, when central banks loosen monetary policy, they inject more money into the economy and lower interest rates, which can make cryptocurrencies more attractive as an alternative investment.
Understanding central bank actions can give traders an edge in reacting to economic data and predicting future actions.