“Crypto-asset markets … could reach a point where they represent a threat to global financial stability due to their scale, structural vulnerabilities
“Crypto-asset markets … could reach a point where they represent a threat to global financial stability due to their scale, structural vulnerabilities and increasing interconnectedness with the traditional financial system,” the Financial Stability Board said
Bitcoin gave up recent gains as two reports flagging trouble ahead for cryptocurrencies added to ongoing concern over the threat of war in Ukraine.
Bitcoin fell 0.5% to US$43,790 but was still safely above a key support level of $42,000. Ethereum, its closest rival by market value, was down 1.4% to US$3,091.
A report by leading crypto analysts warned digital tokens face a period of prolonged uncertainty due to “approaching storm clouds”.
Rising inflation, interest rate hikes, and uncertainty over Ukraine are some of the “numerous macro headwinds” cryptos face, on-chain data provider Glassnode warned.
Further hitting sentiment, the Financial Stability Board (FSB) said cryptos may soon pose a threat to global financial stability.
“Crypto-asset markets … could reach a point where they represent a threat to global financial stability due to their scale, structural vulnerabilities and increasing interconnectedness with the traditional financial system,” the international body that monitors and makes recommendations on the global financial system said.
Adding to the woes, Charlie Munger, the partner of Warren Buffett and the vice-chair of conglomerate Berkshire Hathaway (NYSE:BRK), described cryptocurrency as a “venereal disease” in his latest attack on the digital assets.
Bitcoin and Ethereum are roughly 35% below all-time highs seen in November, as worries over the health of the global economy and tensions between Russia and the US sapped investor confidence.
However, in recent weeks cryptos have found limited support as investors capitalised on the recent selloff to ‘buy the dip’.
Meanwhile, speculation Colorado may accept Bitcoin as payment for taxes has gained attention in the market.
“Historically speaking, Colorado has been a relatively crypto-friendly state and was among the first government bodies to adopt blockchain technology into its systems, “Naeem Aslam, Ava Trade chief market analyst, said.
“To turn this idea into a reality, Colorado will likely have to partner with a crypto company so that it is able to smoothly accept cryptocurrencies as payment from its citizens [for taxes],” Aslam added.
Across the board, the losses this morning are relatively minor. Solana was down 3.1% – the only drop more than 2% in the top 30 cryptos.
Further down the pecking order, Gala, Axie Infinity, and Theta Network lost 4.4%, 4.1%, and 3.8% respectively.
Overall, 70 of the leading 100 cryptos were trading in the red on Thursday.
Shiba Inu and Cosmos bucked the trend with gains of 5.2% and 6.1% respectively. Near Protocol and Fantom advanced 2.5% and 2.0%.
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