The year 2022 will go down in history as one of the most turbulent for cryptocurrencies. Since the beginning of the year, cryptocurrencies have started to experience small declines that have deepened over the weeks. When we consider the level of the crypto market since the beginning of the year until today, we realize that the market has lost some 1,000 billion dollars.
This happened in a rather complex context for cryptocurrencies. Macroeconomic concerns are growing more serious and regulators are scrutinizing cryptocurrencies, which could lead to increased scrutiny and restrictions that will ultimately affect how investors use cryptocurrencies as well.
And if the above weren’t enough, what happened to Terra’s collapse was undoubtedly one of the toughest events on the market. This drop in a stablecoin accelerated the loss and left major and virtually all cryptocurrencies quite low and in the red.
Also, on May 18 of this year, Gary Gensler, president of the Securities and Exchange Commissionattended a hearing hosted by the U.S. House of Representatives Appropriations Committee, in which he warned about the risks of cryptocurrencies.
He is particularly concerned that if stablecoins fall and investors have already suffered huge losses, there is no real measure of what can happen to cryptocurrencies that are not stable and fluctuate constantly.
It should be noted that this is not the only regulator to talk about cryptocurrencies in recent days. One of the most recurring concerns is that cryptocurrencies can affect traditional financial systems, which is why these entities are likely to take action very soon.
Is collapse near?
The Demand For The Collapse Of The Cryptocurrency Market Is Constant† This is a topic that has been discussed on several occasions and every time there is a price drop, we talk about it. On the occasion, the chairman of the Commodity Futures Trading Commission said on May 16 that he believed cryptocurrencies would crash.
He points out that cryptocurrencies will crash at some point, causing huge losses for cryptocurrency investors. This will then be a “Domino Effectin which traditional assets and markets can be influenced. This is undoubtedly a concern for regulators, which is why they have indicated that they will shortly take preventive measures to prevent these conflicts from arising.
Another who shares a similar view is the US Treasury Secretary, who believes the cryptocurrency market sell-off could become more severe. And when that happens, it can spill over into traditional markets. In addition, he told the country’s Senate Banking Committee that digital assets can pose serious risks to the global economic fabric and that therefore supervision should be strengthened, but that supervision should be coordinated and not isolated supervision, because what is pursued is to system and protect investors.
These views have also become recurring among Federal Reserve officials and other regulators who are confident that cryptocurrencies will fail. Some also said that this is not the first time they have warned about the problem, last year the president of the Federal Reserve Bank said in an interview that they should be careful about buying cryptocurrencies because many of them have no value, so what happens and could happen was predictable.
Is there a chance of recovery?
In the cryptocurrency market, there is always a chance of recovery, even in the darkest of times. Recently, the owner of Galaxy Digital said that 75% of cryptocurrencies will fail. He has also lost about $6 billion of his fortune since the crash started to register, but he remains optimistic about the use of cryptocurrencies.
In a letter to investors published on May 18, he assured that cryptocurrencies will not disappear because the crypto community is quite strong and resilient. So he gave investors some hope for the future and said this was just the beginning. And that it may be a difficult time, but that the recovery will eventually come and then prosperity will return to the market.
To display Hide the table of contents