The year 2022 will go down in history as one of the most turbulent for cryptocurrencies. From the beginning of the year, cryptocurrencies began to experience small declines, which deepened over the weeks. If we take into account the level of the crypt market from the beginning of the year to the present, we realize that the market has lost around $ 1,000 billion.
This happened in a relatively complex context for cryptocurrencies. Macroeconomic concerns are becoming more serious and regulators are focusing more closely on cryptocurrencies, which could lead to greater oversight and restrictions, which will ultimately affect how investors use cryptocurrencies.
And as if the above was not enough, what happened with the collapse of Terra was undoubtedly one of the toughest events on the market. This reduction in stablecoin accelerated the loss and left the most important and virtually all cryptocurrencies quite low and in the red.
Also on May 18 this year, Gary Gensler, president of the company Securities and Exchange Commissionattended a hearing hosted by the House of Representatives of the United States House of Representatives, during which he warned of the risks posed by cryptocurrencies.
In particular, he fears that if stablecoins fall and investors have already suffered huge losses, there is no real measure of what can happen to cryptocurrencies that are unstable and constantly fluctuating.
It should be noted that this is not the only regulator that has talked about cryptocurrencies in recent days. One of the most recurring concerns is that cryptocurrencies could affect traditional financial systems, and therefore these entities are likely to act very soon.
Is there a risk of collapse of the cryptocurrency?
The question of the collapse of the cryptocurrency market is ongoing. This topic has been discussed on various occasions and we are talking about it every time prices fall. On that occasion, the chairman of the Commodity Futures Trading Commission said on May 16 that he believed the cryptocurrencies would fail.
He points out that at some point the cryptocurrencies will collapse, causing huge losses to cryptocurrency investors. This will then create “Domino effectIn which traditional assets and markets could be affected. There is no doubt that this is a source of concern for regulators, and they have indicated that they will soon take precautionary measures to prevent these conflicts from unfolding.
Another who has a similar view is the US Treasury Secretary, who believes that the sell-off in the cryptocurrency market could be more serious. And if that happens, it can spill over into traditional markets. In addition, he told the Senate Banking Committee that digital assets could pose serious risks to the global economic structure, and therefore supervision needs to be strengthened, but it must be coordinated rather than isolated, because what is being sought is to protect the system and investors. .
These views are also repeated among Federal Reserve officials and other regulators who are sure the cryptocurrencies will fail. Some also said this was not the first time they had warned of the problem, last year the Federal Reserve president said in an interview that they should be careful when buying cryptocurrencies because many of them have no value, so what happens and can happen was predictable.
Is there a chance for recovery?
There is always a chance for recovery in the cryptocurrency market, even in the darkest times. Recently, the owner of Galaxy Digital said that 75% of cryptocurrencies will fail. He has also lost about $ 6 billion in assets since the crash began, but remains optimistic about the use of cryptocurrencies.
In a letter to investors published on May 18, he assured that the cryptocurrencies would not disappear because the crypto community is relatively strong and resilient. He gave investors some hope for the future and said that this was just the beginning. And that it may be a difficult period, but eventually a recovery will come and then prosperity will return to the market.
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