Cryptocurrencies are about emotions, not the real economy. Economist explains the strong volatility of digital assets

Cryptocurrencies are more a reflection of investors' emotions than an indicator of real economic processes. This was stated in an exclusive comment to UNN by economist Oleg Pendzin. According to him, this explains the high volatility of digital assets.

The problem is that crypto is actually, unfortunately, more about emotions than about the real state of the economy of a particular country, or the real mechanisms associated with, say, forecasting the volume of industrial production of the global economy

According to him, during one trading day, changes in the value of coins can be significant, and the lack of state regulation only increases the risks for investors.

"In crypto, by and large, at the moment, there are no restrictions. There are no state bodies that would clearly track these fluctuations and carry out interventions," - explained Pendzin.

The economic expert added that because of this, the cryptocurrency environment is "very emotional, very volatile and has little connection with real economic processes".

Let's add

Earlier it was reported that the easing of trade tensions between the US and China and the potential slowdown of inflation in the US may push Bitcoin to new highs, exceeding $109,350.

Fintech expert and co-founder of the first fintech ecosystem in Ukraine, Concord Fintech Solutions, Olena Sosiedka, in a comment to UNN explained that cryptocurrency has long been perceived not as a "speculative asset", but functions as part of the global macrofinancial ecosystem.

She added that digital assets react with growth to positive expectations, especially when it comes to a potential weakening of regulatory pressure or an increase in institutional confidence. The fintech expert emphasized that crypto is an indicator of the financial and political situation.