Bitcoin (BTC) Rising
Over the past 7 days, the first cryptocurrency has risen in price by almost $3.500. The growth of quotations was uneven and showed high volatility. Thus, last Saturday, March 19, Bitcoin price went above $42.000, but it dropped below $41.000 on Monday. After three days of trading, the price went up again, exceeding the mark of $43.000. And on Friday, March 25, the value of the first cryptocurrency was above $44.000.
Bitcoin Growth Reasons and Prospects
Among the main reasons behind the growth of the first cryptocurrency, experts point out the increase in the Fed’s key interest rate, the high inflation level in the US and the related expectation of a further rise in the key interest rate, which was also announced in advance. Bitcoin is seen as a protective asset in the current situation.
On the other hand, Bitcoin remains a high-risk asset, so market participants may prefer to withdraw capital into gold and government bonds, especially since the latter’s profitability is increasing along with the higher key rate. Thus, the actual reasons for the growth of the first cryptocurrency in the future may also provoke a fall in its quotes – this will largely depend on the behavior of market participants and the further Fed’s steps to raise the key interest rate and curtailment of financial support programs.
Risks Related to Cryptocurrencies
The Malaysian Minister of Communications and Multimedia proposed to legalize Bitcoin as legal tender. However, representatives of the country’s Central Bank, the Ministry of Finance and the Securities Commission rejected the initiative. In their opinion, Bitcoin does not have the features of money. In addition, it has security problems and high volatility.
Thailand, where the legalization of cryptocurrencies as official means of payment was deemed impossible, shares a similar view. After the additional study, representatives of the country’s Central Bank and the Securities Commission concluded that digital assets might negatively affect the stability of both the financial system and the economy. The reasons are the same: security problems and high volatility.
Earlier, Thai authorities announced plans to introduce cryptocurrencies as a means of payment and even made practical steps in this direction, but now business representatives are ordered to completely limit the acceptance of payments in crypto from April 1.
Better Regulation for Crypto
Jerome Powell, Chair of the Federal Reserve, also finds cryptocurrencies and stablecoins threatening the stability of the US financial system. He said this at a panel discussion organized by the Bank for International Settlements. He believes that transactions beyond the traditional banking system should be regulated the same way as they are by financial institutions.
The UK is of a similar opinion. The rapid growth of the crypto market without proper regulation could pose risks to financial stability. The regulation of the cryptocurrency sector should be subject to the same laws as the regulation of the financial system. The Bank of England issued a new statement to that effect.
Alternative Opinion
Bitcoin is an “excellent” alternative to traditional finance for residents of those countries whose governments have ineffective monetary policies. Michael Novogratz, founder of cryptocurrency bank Galaxy Digital, said this in an interview with CNBC. In his opinion, if the Fed and the US Treasury could deal with rising inflation and pay off the country’s foreign debt, Americans would have no reason to buy cryptocurrencies. At the same time, he noted that Bitcoin would hardly be used specifically for payments — this asset should be seen as a store of value.
Note that this is not all the crypto news over the past week, but only a cursory overview of the most high-profile newsbreaks. More updates can be found on our website and social networks daily!
