Friday, September 17, 2021
HomeNewsThe next endurance test is already waiting

The next endurance test is already waiting

A coin symbolizing the virtual currency Bitcoin

Tighter monetary policy could stop the rapid recovery in cryptocurrencies.

(Photo: Reuters)

Please fasten your seat belts – let’s go to the wild crypto break! The usual comparison with the roller coaster would be rather belittling as a description for the months of chaos that Bitcoin, Ether and all the other crypto currencies have behind them. After the record high in April, the value of Bitcoin halved to around $ 30,000 by July, only to then celebrate a happy resurrection and climb to the round mark of $ 50,000.

In the meantime, profit-taking has put the price back down a bit, but the rapid recovery is still remarkable because the cryptocurrencies have actually suffered a few low blows in the past few weeks. Gary Gensler, the head of the US Securities and Exchange Commission, made it unmistakably clear that he would campaign for stricter regulation of the crypto world, and at the end of June China pulled the plug on many server farms and hit the global center of the crypto industry hard.

Bitcoin and Co. have recovered surprisingly quickly from both setbacks, and this is due to the fact that the supposed setbacks can also be interpreted very differently, namely as steps on the way into the mainstream.

Gensler’s logic is invulnerable: The crypto universe has long since grown to an order of magnitude that is relevant to the stability of the traditional financial system. So the same or at least similar rules should apply to both worlds. Similarly, the restrictions in China can also be read as signals of further development.

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Due to the tough measures taken by the People’s Republic, many Bitcoin miners migrated to other countries. A broader regional distribution not only fits better with the core idea of ​​all crypto currencies, decentralization. It can also make the crypto world more stable. In the past, interventions by Chinese regulators had repeatedly led to price drops.

If cryptocurrencies have finally arrived in the mainstream this year, does that also mean that the amplitudes of the price development will be somewhat flatter in the future? There could be an answer to this question in the coming weeks.

According to the economics textbook, if the US Federal Reserve actually initiates the turnaround to stricter monetary policy, that would be pretty bad news for non-interest-bearing investments such as gold or cryptocurrencies. If Bitcoin and Co. would survive this difficult phase without major wounds and without the usual chaos, that would be a big step towards more boredom, and that’s part of growing up.

More: How to secure Bitcoin, Ethereum, Cardano and Co.

Hasan Sheikh
Hasan, who loves technology and games, is studying Computer Engineering at Delhi JNU. He has been writing technology news since 2016.


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