In November 2021, Bitcoin was trading at around $67,000, while today it stands at $16,000, which translates into a 70% drop in one year.
2022 has been a difficult year for the world of cryptocurrencies. This financial asset, as of today, marks historic lows. The bankruptcy declaration of FTX -one of the largest bitcoin (BTC) exchanges in the market-, on November 11, has caused the rest to fall like dominoes.
The question now is, is it the end of this type of token and, consequently, of all cryptocurrencies? To answer this question, Joan Ripoll, director of the degree in Economics and Management at the Universitat Abat Oliba CEU, offers his viewpoints.
Ripoll says, regarding cryptocurrencies, that “they are not going to disappear. What this type of crisis or disturbance does is move the tree, shake the market and make some of those financial assets end up disappearing, but their main value -whether whatever, Bitcoin, Ethereum, or any other- it is the technology behind them,” adding that this was the reason why they will not disappear.
“Probably, its operating dynamics -contrary to what the creators of this type of financial products intended- will end up being regulated by the national authorities to safeguard the interests of financial investors,” he explained.
Is It Advisable to Withdraw the Invested Money?
Given the great general fall of cryptocurrencies, where Bitcoin stands out with 70% from last year to this, investors in these financial assets are concerned about what may happen with the money they have invested.
To this great dilemma of whether it is advisable to withdraw it as soon as possible or not, Joan Ripoll says the following:
“It depends on whether you need that money to meet your daily payments or not. The most prudent thing is to wait, because even if the prices fall, as long as I do not sell those cryptocurrencies, those possible losses do not materialize.”
Cryptocurrency Domino Fall
Both analysts and investors fear that, after the bankruptcy of FTX, Genesis will be the next domino to fall, that is, that there will be a contagion and that the rest will follow. “It is a possibility, surely remote in the current context, but it accentuates mistrust,” says Joan Ripoll.
“Since there is no regulation of any type, anyone can venture to create a financial company that operates on the basis of these assets that are not regulated. The apparent attraction that the lack of regulation is, in a context of uncertainty like the current one, has become its main weakness because this deregulation increases mistrust. The fact that there is no type of guarantee fund, which can operate in the market … It generates uncertainty, and can end up causing a domino effect affecting other institutions. It is unlikely, but it can happen”, asserted the expert.
By Audy Castaneda
