3 Reasons Why Toko Token (TKO) is the Crypto North Star in a Global Economy That is Going South
Since the crypto market hit its record USD3 trillion market capitalization back in November 2021, so many things have happened that the interval between then and now seems like an eternity. As we embark on the second quarter (Q2) of 2022, the capitalization of the crypto market is hovering somewhere around USD2 trillion which is a third of the record high USD3 trillion market capitalization set a few months back. Nonetheless, market capitalization only tells one side of the story as it merely indicates the quantitative aspects of the growth of the crypto market but not so much the qualitative aspects. As cryptocurrencies become increasingly mainstream, the positive correlation between these currencies and the general financial investment markets, particularly the stock market, has become stronger than ever.
Using Bitcoin as the yardstick, research conducted by the International Monetary Fund (IMF) found that the correlation coefficient between the returns on Bitcoin and those on the Standard and Poor’s 500 (S&P 500), which is the benchmark stock index for the United States (U.S) that tracks the performance of 500 large-cap public companies listed on stock exchanges in the country, rose from 0.01 during the period from 2017–2019 to 0.36 during the period from 2019–2021. Whilst the massive jump in the strength of the crypto-stock correlation has provided a channel for investor sentiments to spillover between the two asset classes, thereby allowing the stock market to offset some of the volatilities of the crypto market which in turn helps stabilize the latter, the flip side is that the crypto market has become more vulnerable to the economic headwinds to which the stock market has long been subjected to and which are currently engulfing the global economy. In these tumultuous times we are living in, there really is no place for the crypto market to hide from this flip side of the stronger crypto-stock correlation.
The Implications of Stronger Crypto-Stock Correlation
As the global financial powerhouse, the U.S is a barometer for the economic climate around the world. In January 2022, the U.S recorded a 40-year high inflation level of 7.5% no thanks to increased consumer demand and supply deficits due to the pandemic. A month later in February 2022, the manifestation of geopolitical risks resulted in severe supply chain disruptions and skyrocketing fuel prices, both of which are factors that are set to edge the already record high inflation levels in the U.S even higher with similar patterns being observed in other countries resulting in stagflation risks. Taking the bull by the horns, the U.S’ Federal Reserve announced on 16 March 2022 that it had approved an interest rate hike of 0.25%, which is the first increase in the country since December 2018, to reel in the U.S’ wayward inflation levels. Given the inverse relationship between interest rates and inflation levels, the interest rate hike by the U.S’ Federal Reserve should bring down, or at least contain, the inflation levels in the country.
From the perspective of the crypto market, the stronger crypto-stock correlation means that the market would be impacted by the U.S’ interest rate hikes in pretty much the same manner in which such hikes have traditionally impacted upon the stock market. Based on the stock market’s past experience, in times of tightening of monetary policies, the resultant reduced financial liquidity means that investors tend to be more risk averse and focus on capital preservation by resorting to conservative investing under which investors would be putting their dough in lower-risk shares such as blue chip stocks. The shifting of the central focus of investors towards stability as opposed to innovativity is likely to translate into lower liquidity levels in the crypto market which would be bad news for any financial market, more so a relatively newfound one such as the crypto market. The million dollar question for crypto investors therefore, is as to which cryptocurrency offers the best bet to weather the rising economic headwinds that are threatening to unleash a financial storm, what with the U.S’ Federal Reserve planning to approve six more rounds of interest rate hikes within the course of 2022.
Lighting the Crypto Skies with TKO’s Starlight
With the current geopolitical situation not looking as if it is going to be improving anytime soon, the financial markets in general and the crypto market in particular would need to brace for the mid to long term continuation of the existing economic headwinds. In times of crisis, we tend to look to the skies for guidance not unlike wayfarers in times gone by, i.e. before the invention of the compass let alone the Global Positioning System (GPS), who would gaze at the North Star which is located in the northern skies as a navigational aid. Here are 3 features of TKO which provide 3 reasons why TKO is the crypto North Star in a global economy that is going south:-
Feature #1 — Tokenomics Management
Not unlike the U.S’ Federal Reserve which has devised its monetary policy to manage the operational parameters of the United States Dollar (USD), Tokocrypto has put in place an elaborate tokenomics management framework which includes a release schedule for TKO to optimize the performance of the token. In times such as these when financial turbulence abounds, TKO’s tokenomics management framework plays a critical role in shoring up the foundations of the token to warrant its long term viability.
Feature #2 — Liquidity Management
As with any utility token, TKO’s efficient functioning requires the token to be imbued with a certain degree of market liquidity failing which there may be undue delays in the settlement of its transactions. In times such as these when there is a liquidity crunch in the market, TKO’s high liquidity as illustrated by its average daily trading volume of USD46,174,600+ stands testament to the fundamental strength of the token which high liquidity ensures that transactions would be promptly settled notwithstanding the prevalent conditions in the market.
Feature #3 — Inflation Management
The law of supply and demand posits that the market dynamics of any financial instrument are such that the supply of the instrument is inversely proportional to the value of the instrument. In times such as these when there are ultra-high inflation rates that are gobbling up the value of financial instruments, Tokocrypto had in line with its policy of providing the best value for money for TKO holders, completed the third and latest round of TKO Burn on 24 March 2022 whereby a total of 650,000+ TKOs amounting to about USD474,000+ have been burned.
Former U.S President John F. Kennedy once wisely advised that, “in a crisis, be aware of the dangers but recognize the opportunities.” As the financial markets continue to grapple with the economic headwinds brought about by the current geopolitical situation, crypto investors would do well to heed Kennedy’s advice by being on the lookout for the dangers brought about by these headwinds to their investments while keeping an eye out for the possible arising of opportunities which they can capitalize on. If crypto investors are in need of some purposive direction, they would find that somewhere in the crypto skies there is TKO, the crypto North Star in a global economy that is going south.
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