Of course there will be regulations and, on average, it will be a good thing. Regulation and thus the absence of regulatory and legal uncertainty are a necessary component, if not a prerequisite for innovation, growth and ultimately adaptation.
Not news, just fact
DeFi, i.e. a decentralized financial ecosystem – one with rules – is not a contradiction, but a must for success. Wasn’t it the clear and transparent rules enforced by software that made Bitcoin? (Bitcoin 45,805.00 + 4.81%) so attractive from the start?
SEC chairman Gary Gensler spoke, and market participants were shocked. What did you expect? He called cryptos the “Wild West” and said that every Initial Coin Offering is a security. This is not news, it is a fact.
Fair rules are a necessity
Sensible and fair rules are necessary so that the markets as well as the entire industry can develop. Stopping fraudulent actors and ensuring that those who obey the rules have nothing to fear are essential for trust in this technological innovation and the flourishing of the industry.
Perhaps most importantly, fraudsters do not let retail investors lose their last penny. To do this, releasing a Bitcoin ETF would be a quick win, and investors would be protected from nested and structured products with high fees.
With the offer of an NFT CryptoPunk for $ 90.5 million, the NFT mania has reached a new high. Non-fungible tokens stand for non-exchangeable or forgery-proof tokens. An ideal prerequisite for art and intellectual property, where technological progress always means more piracy and better pirated copies. The NFT boom came unexpectedly and came out of nowhere. Just like the announcement from MicroStrategy last year to hold reserves in Bitcoin in the future. This creates a trend.
Back to the non-fungible tokens, namely the original NFT – CryptoPunks: a collection of 24 × 24 pixel images in 8-bit style with outsiders and eccentrics as motifs. Exactly 10,000 copies exist, each with its own supposed personality and a unique combination of unmistakable, randomly generated characteristics. The market value of the CryptoPunks is over $ 2 billion, or 733,729.75 ETH (source: https://nftvaluations.com/cryptopunks).
Crypto Twitter (TWTR 67.37 -2.76%) is full of avatars that adorn themselves with one of these CryptoPunks. Lots of millions for posing on social media? The CryptoPunk-NFT on the Ethereum blockchain change hands for insane sums of money. Hundreds of thousands are common, several million occur, and one of those outsiders, CryptoPunk # 3100, is on sale for $ 90.5 million. What is the motivation to pay such prices for a pixelated picture of a punk?
Unique but useless – like tulips
Bitcoin’s past is tormented by comparisons with tulips and the associated tulip mania in the Dutch Golden Age, when tulip bulbs became an object of speculation. The parallels to Bitcoin are and have always been far removed from any logic. But there are more parallels to NFT. Every NFT is unique by definition – like tulips. Any NFT, apart from aesthetics, is useless – just like tulips.
The NFT market seems to be following the bigger idiot theory: there is a belief, or perhaps better hope, that someone can still be found who is sillier and richer. Logic dictates that the number of bigger fools is finite, and that this trend does not go on forever. Caveat Emptor.
Speculation around Tether
The speculations and rumors about the largest dollar stablecoin have been a long-running hit for years, and arguably the longest running FUD story. The common denominator of all of these Tether stories are reserves. Do these even exist? How are these made up? And where are they kept? All questions that you can philosophize about for hours. The market is talking, and the price of one tether is one dollar. Parity between tether and the dollar.
But what if: Let’s assume it is true that Tether is not covered by dollar reserves. The price of Tether would sooner or later implode and go to zero. What then happens to Bitcoin and other crypto values is the critical question. A price drop of 20%? 40%? 60% or even 80%?
Adaptation is progressing in spite of the fall in the share price
Bitcoin’s price range over the past 52 weeks ranged between $ 9916.49 and $ 64,863.10. Bitcoin has since corrected from 64,863.10 to below $ 30,000 – 55%. And what happened to Bitcoin? Nothing. The market went on, life went on. In reality, the crypto market often corrects 50% or more, but nothing happens except a lower price. The adaptation is progressing.
Market participants are aware of this source of risk and it is included in the price. The repetitive headlines about Tether are not a source of risk, just old wine in new bottles. For years rumors have been simmering about the people involved, about insufficient or insufficient reserves, about regulatory authorities … but the price is at par with the dollar.
One day the tether rumors will also pass and turn out to be a pure blow for the adaptation of Bitcoin. In reality, the Tether-FUD is merely a revelation of one’s own risk aversion to Bitcoin, not a risk specific to Bitcoin.