Hot summer temperatures have done nothing for the current “crypto winter,” which has seen a $2 trillion market drop from highs last year. The downswing, including the spectacular failure of the Terra Luna ecosystem and a cascade of exchanges temporarily halting withdrawals, has livened crypto’s critics including governmental bodies and their academic allies.
The crypto industry should ignore the bluster as it recalibrates. It should also accept legitimate criticisms. The crypto revolution has just begun, and tough battles lay ahead. But ultimately, those screaming “Get a horse” at crypto’s teetering automobile will be proven wrong.
Governments bear much responsibility for the crypto collapse. The trillions printed out of thin air recently had to go somewhere, and crypto, with its generally positive returns, were as good a place as any.
Low-interest rates meant safer alternatives were not feasible. As Mati Greenspan, the CEO of crypto research and investment firm Quantum Economics told CNBC:
“Central banks were very quick to print gobs of money when it wasn’t needed, which led to excessive risk-taking and reckless build-up of leverage in the system.”
Cheap money meant millions poured into untested concepts and undeserving projects. Existing business models that may have seemed solid were not and are now facing collapse and rethinking. Of course, crypto is not the only victim of government profligacy. The S&P is heading towards its worst first half since 1970 as recession fears loom.
Crypto’s problems are short-term. The government-caused monetary bubble will wreak havoc on the industry in the near term, but the exposure of weak business models will strengthen the industry later.
Read the full article at Crowdfund Insider.