Despite the fact that economic headwinds persist, whilst regulators continue the rampage on the crypto-related projects, markets seem to be starting a new chapter. In the last month, the capitalization of digital assets has surged over 17%, surpassing the $1.09 trillion mark. Investors went full "risk on" in hopes of dovish Fed. Yet, there are no signs of crypto summer on the horizon.
In bitcoin, they trust
Binance analysts cite inflation and dollar strength as bullish factors for digital currencies. Despite the high volatility, citizens in Argentina, Brazil, Turkey, and Mexico prefer cryptocurrencies when it comes to a way to store their savings. What would you choose – fiat money that does nothing but devalues or BTC?
In numbers, “Respondents in countries that have experienced 50% or more devaluation of their currency against the USD over the last 10 years were more than 5 times as likely to say they plan to purchase crypto in the coming year than those in countries that have experienced less than 50% currency devaluation.”
Looking at the Egyptian pound, year-to-date, the currency has lost over 21% due to the Central Bank's actions. Recently, the world's largest banks said that the North African country will have to weaken its currency further. Otherwise, the country is unlikely to receive a new loan from the IMF. A dollar might be a safe haven, but what if there are restrictions on foreign currency transactions?
The opposite side of the crypto boom
The influx of money into the market might be a good thing for holders. The problem is that scammers also wait for this kind of moment. Capitalizing on the renaissance of the digital asset market, Martin Shkreli, aka "America's most hated entrepreneur," sold over 160 billion MSI tokens. As a result, the price of the cryptocurrency plummeted by over 60% in one day.
Responding to the community, Shkreli blamed the hackers. Who else could it be? The problem is that the founder of MSMB Capital Management has already been accused of defrauding investors of millions of dollars, so the wallet hacking story is hard to believe.
Does the market need regulators?
Let me start by saying that the whole idea of Bitcoin was to get rid of “Big Brother” in the middle, creating an independent financial system. Sounds like a joke, but in 2014 there was a belief that distributed forms of money such as bitcoin can be used as the digital equivalent of cash, offering the potential for anyone to bank themselves without relying on traditional financial institutions theoretically. It was supposed to bring revolution in personal finance.
The declaration of bitcoin’s independence has basically predicted the future:
“There is a conscious effort to co-opt. The goal is to swallow bitcoin, process it, integrate it, devolve it, and keep it stagnant in the gears of a failed operating system. Bitcoin’s potential is being hijacked. They have their own idea of what they want bitcoin to be. They have their own plan for its potential, and they have an investment in that plan.”
8 years later, we could say,
“Bitcoin is inherently anti-establishment, anti-system, and anti-state Bitcoin undermines governments and disrupts institutions because bitcoin is fundamentally humanitarian”
That idea has completely failed.
There is no anarchistic approach but poor greediness. As a result, the vast majority of anonymous cryptocurrencies vanished, the Tornado Cash crypto mixing service was banned, and investors had to report their holding to the authorities.
As for market manipulation, the EU's efforts are directed at anti-money laundering. The most likely scenario is to shift the responsibility for market manipulation to cryptocurrency exchanges. In that case, the costs for companies like Coinbase would multiply. One thing is clear, regulation is killing the basic principle of cryptocurrencies, and, most surely, it will only get worse. The walking dead in its essence…