Is The Cryptocurrency Market Weakening?

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2022 of the cryptocurrencies started very badly, with a collapse to 40,000 Bitcoin dollars that dragged all the other cryptocurrencies into the abyss, many of which recorded double-digit losses. If you wonder how this was possible, the financial agency Morgan Stanley seems to have an answer.

According to Morgan Stanley, the main reason for the collapse of the cryptocurrencies is due to their rapid and unsustainable increase in value within a couple of years, which would in turn have been caused by the distortion brought by Coronavirus of typical factors of traditional

With the transition from the pandemic phase to the endemic one of Covid-19, however, the taps of central banks and governments have also closed, which have reduced the scope of financial aid and incentives to citizens, while the world is preparing to face the Crown

In response to the apparent resolution of the economic crisis triggered by Coronavirus, the contraction in central bank balance sheets and government aid has led to the increase in market interest rates, which have also hit the cryptocurrencies hard, as well as the cryptocurr

Two other factors contributed further to the worsening of the conditions. The first is the slow negative trend of Bitcoin and other cryptocurrencies such as Ethereum, which lasted for several months between October 2021 and January 2022, which convinced many investors to reduce their confidence in digital coins, and consequently to contract

The second factor, however, would be the recent proposals for regulation of cryptocurrencies carried out practically everywhere in the world, from China, where the hard fist is used against the Miners of Bitcoin, to India, passing also through the European Union.

However, it was the announcement of a regulatory intervention by the Federal Reserve, which in 2022 should regulate all digital currencies, causing further uncertainty in the market, pushing many American investors to caution pending the knowledge of the new rules in terms of crypt taxation

According to Shah, however, not everything is lost: as the use of cryptocurrencies for payments becomes more common, in fact, their value will resume to rise, guaranteeing investors long-term profits. In this way, according to Morgan Stanley, the market could stop considering cryptocurrencies as high risk assets, instead seeing them as stable coins almost like the dollar or the euro.

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