The cryptocurrency market valuation is less than half of the $2.9 trillion it was worth in November.
What’s going on with the cryptocurrency market?
More people than ever before have been holding “cryptos” as a safe-haven asset to hedge against inflation and other central bank offenses. It wasn’t very long ago that investors were paying premiums to get into the hot crypto market action.
The Wild West of Cryptocurrency Investing
The thinking behind investing in cryptocurrencies is basically sound. Unlike fiat currencies, cryptos were initially designed to hold their value, be inflation-proof and, thus, be a wise position to take during economic downturns.And, of course, large value fluctuations are now normal for the many thousands of new cryptos that have been created since bitcoin came on the scene. It has been difficult for most investors or speculators to be certain about the particular intrinsic value of the coin in terms of both use and market value from one day to the next.
A Digital Port in a Fiat Currency Storm
Bitcoin, you will recall, is the original cryptocurrency. It was created amid the global financial crisis in 2009 to be a stable currency in an era of currency instability and uncertainty. Founded on distributed ledger technology commonly known as blockchain, cryptocurrency was intended to be the currency for the digital age.Because it’s anonymous—that’s the “crypto” part of digital currency—no bank, government, or other authority has any visibility or control over your transactions. Cryptocurrency is also fast, easy, and inexpensive to use for transactions worldwide.
Mining Bitcoin, however, does take an enormous amount of electrical energy to power the millions of computers that are used to solve algorithms in order to mine or create more bitcoins. But even that hasn’t been too much of a liability, considering the massive tradeoffs mentioned above.
A New Round of Volatility
Similar growth was seen in 2021. Some coins saw incredible gains in both use and value. Ethereum, for example, saw its market capitalization by 530 percent, rising from just under $83 billion to over $411 billion. A bitcoin competitor, ethereum’s daily transaction levels year-over-year rose 135 percent.No Protection From Uncertainty
Suppose cryptos aren’t the safe haven that they were intended to be. In that case, putting your money into cryptocurrencies is more akin to playing the roulette tables in Las Vegas than investing in a market. Of course, the same could be said of the stock markets as well, and it has.But given the deteriorating state of the world, shouldn’t bitcoin and other cryptos be a haven from all that?
Shouldn’t the uncertainty of the war in Ukraine, the food and fuel shortages that we’re seeing, rising inflation, a massive influx of illegal aliens into the United States and Europe, and other global economic and geopolitical disturbances be driving investors into cryptocurrencies instead of out of them?
The End of Cryptocurrencies?
But with this latest period of massive volatility and investors fleeing the market in droves, is this the end of the cryptocurrency era?It just might be.
Obviously, there’s a major disconnect in the crypto markets and investors from past experience going on at the moment.
What could possibly be driving the cryptocurrency market into collapse?
Could the world’s central banks be a factor?
The argument certainly has merit from a “who benefits from it” point of view.
CBDCs: A New World Order Based on Blockchain?
Today, with the world’s central banks issuing or preparing to issue central bank digital currencies (CBDCs) in the near future, the timing is certainly convenient.What’s good for the yuan is good for the dollar because no central bank in the digital age can tolerate a currency that is unregulated, untraceable, untaxable, fully transactable across the world, and cannot be confiscated.
In short, cryptocurrencies are central banks’ worst nightmare, which is why the banks must destroy them. It looks like that’s exactly what’s happening.
Although based on blockchain technology, CBDCs remove the anonymity that cryptocurrencies provide, enabling governments to have complete visibility into all transactions. This transparency puts enormous power and control into the hands of central bankers and governments.
In fact, fully transparent and controlled digital currencies may soon be the only currency available to anyone.
It sounds too revolutionary and too authoritarian to be true. But it certainly looks like that’s what’s happening.