a crypto fall
Many of you are aware that I’m a believer in certain cryptos, applauded their development and their initial operation outside of the traditional finance industry, and have even been a ‘miner’ of Ethereum in the past. In the process, I’ve been both successful and unsuccessful in roughly equal measure but remain broadly positive. Perhaps because of this several of you have enquired as to their immediate future and are we to expect a crypto fall this Fall? At the risk of stating the bleeding obvious, who knows and don’t ask me!
However, what I can say is that back in August the price of a single bitcoin peaked at a smidgen under $125,000 before falling back to its present value of around $110,000. And during the preceding year it surged over 85%. People are now, understandably, looking at the earlier collapse of Sam Bankman-Fried’s FTX exchange and the onslaught of the 2022/3 crypto winter and inevitably there’s talk of another bubble/crash scenario. If so, it will be painful for those holding the coins but bitcoin, as an example, is undoubtedly on a sounder footing than it was a couple of years ago owing to the involvement of more, and larger, institutional investors, who traditionally take a longer-term view of their investments.
BlackRock’s iShares BTC Trust alone holds almost $90bn. Spot bitcoin exchange-traded funds pull in over $2bn most weeks and, simply put, there are currently more buyers than sellers. Meanwhile, sovereign wealth funds and corporate treasuries are falling-over themselves in allocating their funds into crypto at a record pace and even private companies are treating the currencies as a strategic reserve. Furthermore, a trio of landmark crypto bills are expected to be passed in the US which will draw the contours of a defined regulatory framework. Stablecoins, typically backed by liquid dollar assets, such as treasury bonds, are being touted as the potential future but it’s still early days and most European institutions view them with a combination of scepticism and suspicion.
A bubble, by definition, is a price divorced from reality and from economic fundamentals and who’s to say we’re not in a bubble as it might be a bubble, but if so, it’s the biggest most prolonged, most unusual bubble in history. And the value of your crypto may fall as well as rise…
