Between the market crash, layoffs and the current liquidity crisis. So why are cryptocurrencies crashing? It is important to remember that in this last cycle, crypto assets are not alone. The stock market has also been experiencing a recession, as U.S. policymakers seek to control inflation by tightening the money supply and raising interest rates.
But if Lau and Buchman are wrong, the crypto revolution could stop in their tracks. This year's market crash, which is part of a broader withdrawal of risky financial assets in the face of rising interest rates, could seriously weaken the incentives that have made cryptocurrencies one of the most popular corners of the technological world. The co-founder of the automated cryptocurrency trading platform Coinrule, Oleg Giberstein, believes that cryptocurrencies are suffering the same tensions as other parts of the economy, leading to falling prices. Crypto bank Celsius abruptly halted its withdrawals in recent weeks due to “extreme conditions” in the market, and cryptocurrency hedge fund Three Arrows Capital could be in the process of being liquidated.
The challenge, of course, is that these cryptocurrencies and other crypto assets are often simultaneously financial assets and technological platforms, which means that we have to think about two different categories of regulation that work together. Therefore, cryptocurrency prices are usually quoted in dollars, most crypto transactions involve stable currencies linked to dollars, and stable currencies linked to the dollar are widely used as secure collateral for cryptocurrency loans. Reconsider what you would be most comfortable with in the future, such as allocating less money to cryptocurrencies in the future or diversifying through cryptocurrency-related stocks and blockchain funds instead of buying cryptocurrency directly (although you should still expect volatility when the cryptocurrency markets) fluctuate). Cryptoassets are highly volatile, partly because there is a lot of uncertainty about which cryptographic technologies are the most useful in the long term, for example, which ones the market can coordinate for media of exchange, and many of the applications are technological in nature and novel (or at least not proven).
The exchange said it hasn't been harmed by cryptocurrency companies seeking protection against bankruptcy. The crypto ecosystem has firmly adhered to the traditional financial system, and the dollar dominates cryptocurrency markets just as it does with traditional financial markets.