Moments of celebration have been very rare in recent months for cryptocurrency fans.
For the evangelists, it was even hell because how to carry the good word when everything seems to be collapsing.
The cryptocurrency market has indeed lost more than $2.3 trillion compared to its record of $3 trillion reached in November, according to data firm CoinGecko.
Prices for bitcoin (BTC), the most popular digital currency, have crashed. BTC is currently trading below $19,000 ($18,926.96) from $69,077.44, its November 10 all-time high.
Ether (ETH), the second cryptocurrency by market value, is down 73.4% from its record high of $4,878.26 in November.
Bad Headlines
To this price collapse was added the liquidity crisis caused by the fall of sister tokens Luna and UST. This crisis has taken away many major crypto players such as lenders Celsius Network and Voyager Digital which have filed for Chapter 11 bankruptcy. Thousands of jobs have been eliminated, while small investors have lost their savings.
Bad headlines followed bad headlines. And nothing could come to change things since the so-called crypto winter, a long period of falling prices, seems to have set in.
But all this was true until the forex market, the main competitor of cryptocurrencies, began to become the center of attention of investors. And the reason for this brouhaha is the monetary policies of the major central banks to fight inflation at its highest in 40 years. This stubborn inflation is a headache for households.
But central bank decisions to aggressively raise interest rates are likely to cause a recession, many experts have warned. Given the uncertainties, investors are liquidating risk assets for safe-haven assets like the dollar. The greenback is thus at its highest level against other fiat currencies such as the euro. In recent days, the British pound has fallen to a low against the dollar.
On September 26, the Sterling was marked as much as 5% lower against the greenback, at an historic low of $1.0325, extending declines from last week’s currency market rout that followed a ‘mini budget’ statement from finance minister Kwasi Kwarteng.
That statement, unveiled in only the third week of Prime Minister Liz Truss’ new government, included $80 billion in new borrowing — the largest increase since 1972 — to fund both a planned cap on consumer energy prices over the coming winter and tax cuts for the highest earners in the world’s fifth largest economy.
The Case for Bitcoin
The setbacks of the pound and especially the upheavals shaking the fiat currency market was what cryptocurrency evangelists needed to remind investors that BTC and altcoins are not controlled by any central entity. According to them, this independence is what makes the difference and should encourage investors to choose cryptocurrencies over fiat currencies.
“The case for $BTC is playing out every day,” said billionaire and CEO of Galaxy Digital Mike Novogratz. “With poor stewardship of an economy confidence finally breaks. And then the local currency gets sold off hard. Loot at Turkey, Argentina, and now GBP. The $$ is king right now as [Fed Chair Jerome] Powell doing what a CB [central bank] should do and $ is perceived as safest place.”
The former Goldman Sachs investment banker and leading crypto evangelist believes things are only going to get worse.
“But our deficit is huge and higher rates to stop inflation will only grow that debt mound. While I pray our stewards in DC act responsibly, I fear politics being politics. Populism on both sides growing. Hard to see things not breaking longer term.”
“Boy would the world thinking differently about crypto price moves it they measured it vs world currency baskets instead of just USD,” said on Twitter crypto billionaire Sam Bankman-Fried, co-founder and CEO of crypto exchange FTX.com.
Bankman-Fried, known as SBF in the crypto industry, then posted a chart showing the pound’s plunge.
Billionaire Michael Saylor, another bitcoin evangelist, now repeats that BTC is good for everyone.
“The notion that #bitcoin isn’t good for anybody is unbelievable,” MicroStrategy’s Chairman.
“The vast majority of public policy creates stagflation and there is little that you can do to change this. What you can do is buy #bitcoin and work hard to generate income so that you can #hodl [hold] until the rest of the world realizes that BTC is the best global store of value asset,” he added.
