Crypto Price Check: Is the fix over?

Crypto investors poking their heads out on Monday have only one question.

it’s over?

Cryptocurrency prices have surged in the last 24 hours since the massacre last week when the market lost nearly $200 billion, according to some estimates.

The role of the Fed

Bitcoin was essentially flat at $30,420.63 in its last confirmation on May 23rd. coin gecko. Ethereum was down about 0.5% to $2,067.33, and Dogecoin was down about 1% to $0.087630.

The crash last week came as the stock price plummeted as the stablecoin UST or TerraUSD and its token sister Luna collapsed. Both are cryptocurrencies in the Terra ecosystem.

What is the question now? Cryptocurrency expert Frank Corva finderI think the Fed plays an important role.

“Whether the cryptocurrency fix is ​​over will still depend on what the Fed is doing here,” Corva said. “If the Fed continues to aggressively raise interest rates and start to decline by $47.5 billion to $90 billion on its monthly balance sheet starting in June, the cryptocurrency market will continue to suffer.”

However, if the Fed becomes more dovish and does not take such significant quantitative austerity measures, the cryptocurrency market could bounce back, Corva said.

“Crypto assets are often uncorrelated with stocks in risk-taking markets,” he added. “In other words, crypto assets typically rise exponentially in price compared to growth or tech stocks in a risky environment.”

However, Corva said in hedging markets, crypto assets experience similar price declines to high-risk traditional assets.

He noted that many high-growth tech stocks are trading above 50% of their highs, while Bitcoin and Ether are trading at about the same discount.

Corva said Mike Novogratz, CEO of Galaxy Investment Partners, who lost millions of dollars in the cryptocurrency crash. recent letter“Every investment comes from a macro framework.”

Currently, that macro framework is heavily influenced by the hawkish Fed policy, which affects cryptocurrencies and almost every other asset class.

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‘Based on nothing’

Cryptocurrency analysts say the sharp price drop will increase the demand for more regulation.

Winston Ma, Managing Partner Cloudtree Venturesauthor of “digital warfare – How China’s technological power is shaping the future of AI, blockchain and cyberspace,” said “Higher regulation in the US and Europe could lead to greater volatility in cryptocurrency prices”

Ma said European Central Bank (ECB) President Christine Lagarde at the opening ceremony of the World Economic Forum in Davos, Switzerland, that cryptocurrencies should be regulated “not based on anything”.

“Two days before that, the G7 finance ministers and central bank governors convened to demand expedited and comprehensive regulation of crypto assets,” said Ma. “This week in Davos there will be more cryptocurrency regulation discussions among government leaders, and it is likely that the US will accelerate stablecoin regulation in 2022, as Treasury Secretary Yellen has requested for months already.”

Despite the plunge in cryptocurrency prices, blockchain and cryptocurrency companies dominate Davos’ Main Street. According to Reuters.

Corda said that El Salvador’s President Nayib Bukele, avid cryptocurrency enthusiast, and El Salvador’s central bank have invited 32 representatives from several central banks around the world and 12 other financial authorities from other countries to teach them about the benefits of Bitcoin this week. . This event is called “Bitcoin’s Davos”.

Last year, El Salvador became the first country to legalize Bitcoin.

A bigger trend towards regulation

David Lesperance, Managing Partner, Immigration and Tax Advisor Lesperance & Associates“The bigger trend towards regulation will be clearing out large numbers of cryptocoins and NFTS that will not pass convocation in a regulated environment,” he said.

“The aftermath of the TerraUSD/Luna collapse continues to resonate,” he said. “He said.

Lesperance said that fierce competition between exchanges has dramatically increased the number of tokens available on the platform, which is popular with adventurous but naive investors.

“Major exchanges, including Coinbase, Binance, OKX and, which previously allowed customers to buy Terrana-linked tokens, have suspended trading during the crisis,” he said. “Exchanges play a key role in scrutinizing coins as most jurisdictions have very few legal standards for cryptographic tokens that can be publicly traded for the general public.”

Lesperance said that the strategy of adding more coins to drive growth is showing signs of faltering, so a scrutiny of the standards in place when exchanges decide to list their coins has been scrutinized.

“So far, it’s just an exchange’s decision, but we expect regulators to impose new standards strongly and quickly and take responsibility for non-compliance with those standards,” he said.

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