BITCOIN, USD VELOCITY BOTH CRASH — BUT BTC PRICE REACTED DIFFERENTLY

In the turbulent world of finance, unexpected correlations and divergences often emerge, creating intriguing puzzles for investors and economists alike.Recently, a peculiar scenario unfolded: both the velocity of the U.S. dollar and the velocity of Bitcoin experienced significant downturns. Velocity, in this context, refers to the rate at which money changes hands within an economy. USD. APP. Scan Download. Market Bitcoin, USD velocity both crash but BTC price reacted differently Copy Link. Cointelegraph Aussie cop accusedA crashing dollar velocity suggests people are holding onto USD rather than spending or investing it.Similarly, a declining Bitcoin velocity indicates less BTC is circulating for transactions, with more investors choosing to hold, or ""hodl,"" their digital assets. Bitcoin, USD velocity both crash just BTC toll reacted differently . Rampant inflation of the dollar's M2 money supply is only enriching the cantillionaires, Max Keiser argues as its velocity hits tape lows.However, while these two seemingly parallel crashes occurred, the price of Bitcoin exhibited a unique reaction, defying simple economic models.This divergence sparks questions about the underlying forces driving the cryptocurrency market and its increasingly complex relationship with traditional financial systems. H mais d lares americanos do que nunca, mas a taxa com que eles movem na economia nunca foi t o baixa. Isso foi demonstrado com as pr prias estat sticas do Federal Reserve (Fed) em 31 de agosto, que mostraram que um colapso na velocidade da oferta monet ria M2 ocorreu apesar da impress o recorde de dinheiro.What does this mean for the future of Bitcoin?How can investors interpret these conflicting signals?And what does this event reveal about the evolving landscape of digital finance in a world grappling with inflation and economic uncertainty?We'll explore these questions and more as we delve into the intricacies of this fascinating financial phenomenon.Join us as we unpack the dynamics behind the simultaneous crashes in USD and Bitcoin velocity, and how Bitcoin's price reacted in its own peculiar way.

Understanding Velocity: USD vs.Bitcoin

To understand the divergent reactions, it's crucial to first grasp the concept of velocity for both the U.S. dollar and Bitcoin.

What is Money Velocity?

Money velocity, whether referring to USD or Bitcoin, is an economic term that measures the rate at which money is exchanged in an economy.In simpler terms, it reflects how frequently one unit of currency is used to purchase goods and services within a specific timeframe.

• High Velocity: A high velocity indicates that money is actively circulating, fueling economic activity and potentially driving up inflation if the money supply grows too quickly.
• Low Velocity: A low velocity suggests that money is being hoarded or saved, leading to decreased economic activity and potentially deflation if demand decreases due to lack of spending.

USD Velocity: A Sign of Economic Uncertainty?

The velocity of the U.S. dollar (specifically, the M2 money supply velocity) has been on a downward trend, hitting record lows according to Federal Reserve statistics.This implies that despite an increase in the amount of USD in circulation due to quantitative easing and other monetary policies, people and businesses are choosing to hold onto their dollars rather than spend or invest them.This behavior can be attributed to several factors:

• Economic Uncertainty: Concerns about economic recession, job security, and future financial stability can lead individuals and businesses to hoard cash as a safety net.
• Low Interest Rates: When interest rates are low, the incentive to save or invest money decreases, leading to less circulation of money in the economy.
• Rampant Inflation: As Max Keiser argues, rampant inflation enriches the ""cantillionaires"" while decreasing the purchasing power of the common individual, who then hoards currency as their spending power diminishes.

Bitcoin Velocity: HODLing as a Dominant Strategy

Similarly, Bitcoin velocity has also seen a decrease.However, the reasons behind this decline differ from those affecting the USD. Data from on-chain monitoring resource CryptoQuant underscores the robustness of Bitcoin s supply velocity fewer and fewer coins are circulating as investors choose to save, not spend. Bitcoin money supply velocity vs. price chart. Source: CryptoQuantIn the Bitcoin ecosystem, a lower velocity often signals increased adoption and long-term investment, rather than economic stagnation.

• HODLing Culture: The term ""HODL"" (hold on for dear life) is a popular mantra within the Bitcoin community.It reflects the belief that Bitcoin's long-term value will significantly appreciate, encouraging investors to hold onto their coins rather than spend them.
• Scarcity and Store of Value: Bitcoin's limited supply (21 million coins) makes it a scarce asset.Many investors view Bitcoin as a store of value, similar to gold, and prefer to hold it as a hedge against inflation and economic uncertainty.
• Increased Institutional Adoption: As more institutional investors enter the Bitcoin market, they tend to accumulate and hold large amounts of BTC, further reducing its circulating supply and velocity.

The Price Divergence: Why Bitcoin Reacted Differently

The key question is why Bitcoin's price reacted differently despite both USD and Bitcoin velocities declining.The answer lies in the underlying narratives and forces driving each asset.

Bitcoin's Unique Value Proposition

While the U.S. dollar is subject to the monetary policies of the Federal Reserve and influenced by macroeconomic factors, Bitcoin operates in a decentralized, permissionless ecosystem.Its value is driven by factors such as:

• Decentralization: Bitcoin's decentralized nature makes it resistant to censorship and government control, appealing to individuals who value financial autonomy.
• Limited Supply: Bitcoin's fixed supply of 21 million coins provides a hedge against inflation, as its value is not subject to inflationary pressures caused by central banks printing more money.
• Global Adoption: Bitcoin is a global asset that can be transferred across borders without intermediaries, making it attractive for international transactions and remittances.
• Technological Innovation: Ongoing developments in Bitcoin's technology, such as the Lightning Network, improve its scalability and usability, further enhancing its value proposition.

Price Fluctuations Amidst Velocity Crash

Despite the decrease in velocity, Bitcoin's price experienced significant fluctuations, including a rapid retreat from a newfound all-time high around $100,000, briefly plunging below $90,000 before settling in the mid-$80,000 to $90,000 range.This volatility can be attributed to several factors:

• Market Sentiment: News events, regulatory announcements, and social media trends can significantly impact market sentiment and trigger price swings.
• Leverage and Liquidations: High leverage in the cryptocurrency market can amplify price movements.Sudden price drops can lead to mass liquidations, further exacerbating the downward pressure.The reports of $1.34 billion in liquidations with 367,500 traders wiped out in a single day underscore this risk.
• Profit-Taking: After a significant price rally, some investors may choose to take profits, leading to a temporary price correction.
• Correlation with U.S. Data from on-chain monitoring resource CryptoQuant underscores the robustness of Bitcoin s supply velocity fewer and fewer coins are circulating as investors choose to save, not spend.Equities: Bitcoin has shown a correlation with U.S. equities markets, so weakness in the stock market can also pressure Bitcoin's price.

The Role of Institutional Investors

The growing presence of institutional investors in the Bitcoin market is another crucial factor.These investors often have different investment strategies and risk profiles compared to retail investors. Trusted News Discovery Since 2025. Global Edition. Saturday, JTheir actions can significantly impact Bitcoin's price and volatility.

• Long-Term Holding: Institutional investors tend to have longer investment horizons and are more likely to hold Bitcoin for the long term, contributing to the decreased velocity.
• Strategic Allocation: Institutions allocate a portion of their portfolios to Bitcoin as a strategic investment, further validating its legitimacy and potential.
• Market Manipulation (Potential): While less common, the potential for large institutional players to manipulate the market exists, contributing to volatility.

Analyzing the Implications for Investors

So, what are the key takeaways for investors from this unique scenario? Please note, this is a STATIC archive of website cointelegraph.com from, cach3.com does not collect or store any user information, there is no phishing involved.Here's a breakdown of the implications and how to navigate the complexities of the cryptocurrency market.

Diversification is Key

As with any investment, diversification is crucial.Don't put all your eggs in one basket. Although Bitcoin (BTC) continues to hold steady in the mid-$80,000 range, analysts are forecasting that significant volatility may be imminent for the leading cryptocurrency. That said, most analysts predict a potential price rally for the apex digital asset.Allocate your investment portfolio across different asset classes to mitigate risk. After hitting a high of $103,853 on Thursday, the price of bitcoin (BTCUSD) began drifting lower, briefly plunging all the way to $92,251. Bitcoin was last trading 1.2% lower at $97,859 on Friday.A well-diversified portfolio can help you weather the volatility of the cryptocurrency market and protect your overall wealth.

Understand Your Risk Tolerance

The cryptocurrency market is inherently volatile. 20 Online Gold Mines for Finding Freelance 31 Travel Magazines and Websites That Pay 40 Free Writing Contests: Competitions With Cash 11 Best Jobs for Lazy People WhoBefore investing in Bitcoin or any other cryptocurrency, assess your risk tolerance and invest only what you can afford to lose. Outspoken Bitcoin investor and host of the Keiser Report, Max Keiser, explains that his $400K BTC price prediction will coincide with the U.S. dollar s collapse. Load more articlesUnderstanding your risk tolerance will help you make informed decisions and avoid emotional trading, which can lead to significant losses.

Do Your Own Research (DYOR)

Don't rely solely on news headlines or social media hype. Bitcoin's price plunged below $94,000 late Thursday in rapid retreat from its newfound all-time high around $100,000. There was no immediately obvious reason for the drop.Conduct your own thorough research (DYOR) before investing in any cryptocurrency. Bitcoin price falls below $90,000 on Tuesday after dropping 4.89% the previous day. The total liquidations are $1.34 billion, with 367,500 traders wiped out in the past 24 hours. After its recentUnderstand the underlying technology, the project's goals, and the team behind it.Informed decisions are more likely to be successful in the long run.

Focus on Long-Term Fundamentals

While short-term price fluctuations can be tempting to trade, focus on the long-term fundamentals of Bitcoin and other cryptocurrencies.Consider factors such as adoption rate, technological advancements, and regulatory developments. Bitcoin and USD speed both crash but BTC price reacted differently Cointelegraph See also Asian stocks stutter ahead of US presidential debate and oil crash Reuters.com There are more US dollars than ever before, but the pace at which they move through the economy has never been lower.A long-term perspective can help you ride out the volatility and benefit from the potential long-term growth of the cryptocurrency market.

Be Aware of Market Sentiment

Market sentiment can significantly impact cryptocurrency prices.Pay attention to news events, social media trends, and regulatory announcements.However, don't let emotions drive your investment decisions. Bitcoin (BTC) price slid below the $90,000 mark, pressured by a broad crypto selloff and renewed weakness in U.S. equities market. Bitcoin (BTC) continued its decline on Tuesday, dropping 7.2% to $88.3K on Tuesday morning (European time).Use market sentiment as an additional data point to inform your strategy, but always stick to your long-term plan.

Consider Dollar-Cost Averaging (DCA)

Dollar-cost averaging (DCA) is a strategy where you invest a fixed amount of money at regular intervals, regardless of the price.This strategy can help you mitigate the impact of volatility and reduce your risk of buying at the top. Bitcoin, USD velocity both crash but BTC price reacted differently There are more United States dollars than ever, but the rate at which they move Bitcoin, USD velocity both crash but BTC price reacted differently There are more United States dollars than ever, but the rate at which they move around the economy has never been soDCA is a particularly useful strategy for investing in volatile assets like Bitcoin.

The Future of Bitcoin and USD Velocity

Predicting the future is always a risky endeavor, but we can make some educated guesses based on current trends and potential developments.

Potential Scenarios for Bitcoin

• Continued Adoption: If Bitcoin continues to gain adoption as a store of value and medium of exchange, its price could significantly increase, even with low velocity.
• Regulatory Hurdles: Increased regulatory scrutiny could hinder Bitcoin's growth and negatively impact its price.
• Technological Breakthroughs: Innovations like the Lightning Network could improve Bitcoin's scalability and usability, driving further adoption and price appreciation.
• Economic Downturn: During times of economic uncertainty, Bitcoin could serve as a safe haven asset, attracting investors seeking to protect their wealth.

Potential Scenarios for USD Velocity

• Increased Spending: If economic conditions improve and consumer confidence rises, USD velocity could increase, fueling economic growth.
• Inflationary Pressures: Continued monetary easing by the Federal Reserve could lead to higher inflation, further decreasing the purchasing power of the dollar and potentially driving investors towards alternative assets like Bitcoin.
• Interest Rate Hikes: Raising interest rates could incentivize saving and investment, potentially increasing USD velocity.

Conclusion: Navigating the New Financial Landscape

The simultaneous crash in Bitcoin and USD velocity, coupled with Bitcoin's unique price reaction, highlights the complexities of the modern financial landscape.While traditional economic models may provide some insights, they often fail to capture the nuances of the cryptocurrency market.Understanding the underlying forces driving Bitcoin's value, such as its decentralization, limited supply, and global adoption, is crucial for investors. Rampant inflation of the dollar s M2 money supply is only enriching the cantillionaires, Max Keiser argues as its velocity hits record lows. There are more U.S. dollars than ever, but the rate at which they move around the economy has never been so low.That was according to the Federal Reserve s own statistics on Aug. 31, MoreWhile a crash in USD velocity indicates more US dollars than ever but the rate at which they move around the economy has never been so low, Bitcoin's low velocity is an indicator that fewer coins are circulating as investors choose to save, not spend.By diversifying your portfolio, understanding your risk tolerance, conducting thorough research, and focusing on long-term fundamentals, you can navigate the volatility of the cryptocurrency market and potentially benefit from its long-term growth.Remember that the market is constantly evolving, and staying informed and adaptable is key to success.Keep learning, stay curious, and embrace the opportunities presented by the new digital economy.