GDP is a tool that determines the behavior of investors.

When talking about the economy, sooner or later one indicator is mentioned — GDP. But what is behind this abbreviation and why does it have such an impact on cryptocurrency markets? Let's find out.

Basic Understanding: GDP is the sum of all economic activity

GDP is an indicator that sums up the value of all goods and services produced within a country's borders over a specific period—quarter or year. From cars to services, from retail to healthcare—any spending within the economy is included in this calculation.

Three ways GDP is calculated is this value

There are several methodologies for calculation. By value added, specialists sum up the entire increase in the value of goods at each stage of production. By income, they add up people's earnings, corporate profits, and taxes. By expenditure, they gather consumer spending, corporate investments, government spending, and net exports. Each method yields the same result, but from different perspectives.

Investors view GDP as a signal of confidence

When the economy grows, it translates into confidence. Companies receive more revenue, people spend more actively, and investors begin to invest in stocks, bonds, and digital assets. GDP growth is a signal where risk seems manageable.

The fall, on the contrary, causes panic. When the indicator decreases, investors worry about recession, unemployment, and declining incomes. During such periods, they massively close positions in cryptocurrencies and stocks, leading to price crashes.

GDP is a thermometer of the economy that affects all markets.

Governments use GDP when shaping financial policy. Companies use it when planning expansion or contraction. Investors use it when allocating portfolios among assets. In the cryptocurrency space, this indicator also matters, as demand for digital assets correlates with overall economic sentiment.

In other words, GDP is not just statistics — it is the pulse of the economy that all market participants can hear.