Crypto crisis

21 NOV,2022 | MEDC


The meltdown of the FTX cryptocurrency exchange this week set alarm bells ringing in financial markets. It may put more pressure on an already bearish crypto market. The past three years have been a rollercoaster for cryptos. Speculators embraced these assets during the pandemic when central banks kept interest rates low and encouraged risk-taking. But the bubble had to burst. The moment interest rates rose, speculators sold these assets, indicating that they are not really a hedge against inflation, whatever else be their other merits. The speed of their collapse also indicates the extent of their fragility. But some good may emerge from this chaos. The ensuing turmoil could lead to a sober and more realistic reassessment of crypto as an asset class, enabling policymakers to take a fresh look at how it could be better regulated.

*Picture Credit: Google

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