Last Friday the 21st, the cryptocurrency market lost more than 10% of its value in just 24 hours, causing investors to lose the equivalent of 204,000 million dollars in the process. If we extend the time period to the last week, the losses amount to more than 20%. And so far this year, bitcoin and ethereum —the two most popular cryptocurrencies— have suffered decreases of 17% and 25%respectively.
In summary, despite having experienced its all-time high last November, right now 75% of the 2021 gains in the cryptocurrency market have already vanishedand this is at its lowest point since the end of last July 2021.
How to buy Bitcoins safely and without risk
An unrecommended haven of value?
Shortly before that minimum was reached, the writer and analyst Nassim Taleb, author of ‘The Black Swan: The Impact of the Highly Improbable’, denied that bitcoin and other cryptocurrencies could be converted no longer in a real currency, but merely in an asset that —as occurs with gold— would act as a reliable hedge against inflationor merely as a safe haven of value against government decisions or catastrophes.
For Taleb, the fact that in March 2020 bitcoin fell even more than the stock market and later recovered along with it “after a massive injection of liquidity” constitutes “sufficient proof that it can hardly be used as a hedge against systemic risk“.
so looks like
1- Bitcoin is not hedged against adversity
2- Bitcoin is not hedged for inflation
3- Bitcoin is not hedged for deflation
4- Bitcoin is not currency
5- Bitcoin is nothing pic.twitter.com/yaP9ciDZYs
— Nassim Nicholas Taleb (@nntaleb) December 4, 2021
And unfortunately, we’ve had a few weeks where various factors are doing nothing more than increasing said systemic risk. Let’s review some of the causes…
Why is this happening?
Changes in monetary policy in the United States: Stock markets in general, but especially those of the United States, have suffered sharp falls in recent weeks after the announcement that the US Federal Reserve intends to tighten its monetary policy to try to curb inflation, which will mean a reduction in circulating money .
Imminent armed conflict in Eastern Europe: The pre-war context between the NATO forces and Russia with respect to the mutual border concentration of troops, with all that this could imply at the economic level (possible US economic sanctions against Russia, imminent energy crisis in Europe, dependent of Russian gas pipelines, etc.).
Russian proposal to ban cryptocurrencies: The Central Bank of Russia has suddenly proposed to ban both the use and mining of cryptocurrencies on its territory; the first for making it difficult to control money movements, and the second for being an obstacle to the fulfillment of sustainability objectives.
Europe could follow in Russia’s footsteps: The European Securities and Markets Authority (ESMA) has also put a mining ban on the table, leaving at least the door open to promoting the Proof of Stake (PoS) mechanism that will be the basis of Ethereum 2.0.
Kazakhstan, unstable politically and in connectivity: This ex-Soviet republic in Central Asia became the great refuge of Chinese ‘crypto miners’ when it also banned such activity a few months ago. His attractiveness? Low electricity prices. But first their rise, and later the political instability caused by the protests that followed this rise, and which have led to constant cuts in Internet access and/or electricity, have turned the country into an unprofitable location. for crypto miners.