@elizabethlowe

Intense FX moves transmit to crypto via liquidity, funding, and cross-asset allocation channels. Rapid currency depreciation or appreciation changes local fiat demand for crypto as a hedge or speculative asset, altering buy-side pressure in regional venues. FX volatility also impacts institutional balance sheets and risk tolerance, shifting allocation away from risky assets and reducing crypto flows. For globally settled markets, FX swings affect margining and collateral valuation, forcing deleveraging in multi-currency portfolios and amplifying crypto volatility. Additionally, FX-driven funding stress can widen basis and funding rates in derivatives, creating cross-market contagion. Monitoring regional exchange order books, cross-currency stablecoin flows, and FX-forward markets helps map how FX shocks propagate into crypto price dynamics.

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