Crashing Crypto Market
- Bitcoin has lost more than two-thirds of its value while Ethereum has lost almost 80% from its peak. As a result, the overall market capitalisation of cryptocurrencies has dropped under $1 trillion for the first time since January 2021.
Why this fall in prices?
- In order to fight inflation, The US Federal Reserve has tighten the monetary policy due to which there is fall in prices of stocks.
- According to some analysts fall in prices of stocks also have led to crash of the crypto currencies market.
- As central banks withdraw liquidity from the market, there’s less money chasing assets, which in turn causes the prices of assets to drop.
What is the Government’s view?
- Some sceptics have also stated that, while private cryptocurrencies may eventually become viable alternatives to fiat currencies, governments and central banks may refuse to allow this.
- Many countries have taken steps to hinder broad adoption of cryptocurrencies.
- While some governments, such as China and Russia, have openly banned cryptocurrencies, others, like as India, have attempted to aggressively tax and regulate them.
- While the government of India has not issued a blanket ban on cryptocurrencies, the Reserve Bank of India has been vociferous about the need to do so.
What will be the future of cryptos?
- Cryptocurrency supporters believe that cryptocurrencies like Bitcoin have always been prone to wild price swings, and that now is a great moment to buy these virtual currencies at a discount.
- To be honest, many crypto-enthusiasts have profited handsomely in the past when they purchased cryptocurrencies during panic selling periods.
- They suggest that, similar to gold, cryptocurrencies shield investors from price inflation.
- It’s worth noting that, unlike central bank-issued fiat currencies, the quantity of various cryptocurrencies is limited by design.
- Investors can protect themselves from central bank debasement by storing their wealth in cryptocurrencies that preserve or even increase in value over time.
Source The Hindu
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