It's no secret that the crypto winter of 2018-2019 was a difficult season. For investors, traders, and those that believe that digital assets are the future of money.
With the Binance and Coincheck hacks, the cryptocurrency market began to plummet. Taking Bitcoin as a benchmark, each piece went from costing nearly $20,000 to just $5,500, decimating the confidence of Bitcoin savers, traders, and even developers who jumped out of the boat at the time.
But at the moment of writing this article, putting together all the US Federal Reserve bank's existences, they add up to almost 9 trillion dollars, and simultaneously, the capitalization of the entire crypto market adds up to 800 billion dollars.
That is, almost 10% of the entire fortune of the United States Federal Reserve. This percentage was even higher at Bitcoin's biggest price spikes when the market hit $3 trillion. That is, more than a third of all money that is in circulation in the USA. So the FED and the Congress regulators might have seen something scary there, and now seem to be trying to fight back.
This crypto winter seems to be longer and darker since the struggle of the institutions against decentralization is added to it.
These are some keys you should understand the market that is about to come.
Bitcoin and the crypto environment have become a stone in some countries' shoes. Countries with large capitals and whose fiat currencies are considered as safeguards of value. In many cases, digital assets are preferred over bank notes.
The popularity of the king of cryptocurrencies has been greatly promoted thanks to decentralization and its advantages. There is distrust and disagreement among the public, towards central banks, since these tend to generate inflation at the request of the government in power. As well as the ability to withhold money from investors and savers or not respect the privacy of their transactions.
This, in turn, has given rise to a series of events, which, far from being isolated, seem rather be orchestrated and somehow related to each other.
For several months now, economists have been announcing that 2023 will bring the worst economic crypto winter seen in years. Aside from the fact that the consequences of the massive post-pandemic cash printing are beginning to be seen.
After stimulus checks were issued due to COVID-19, the rampant inflation in the United States led the members of the Federal Reserve to decide a way to get all that money back into their possession, through the increase in interest rates.
The recent rise in interest rates has been particularly detrimental to the crypto market due to its high-risk nature. As rates rise, investors tend to shift their capital away from highly volatile investments, into safer ones like stocks and bonds.
The increase in rates has also caused a decrease in the liquidity of the cryptocurrency market. Liquidity is important for investors to buy and sell cryptocurrencies at competitive prices. When liquidity decreases, it is more difficult for investors to enter or exit the market. This can hinder price movements.
Since the dismantling of Silk Road, to date, the fight "against money laundering" and "protecting" citizens from possible scams associated with the crypto environment have been a narrative constantly repeated by its institutional detractors. These are mainly legislators from different countries, politicians in high places of power, and above all the presidents of the Central Banks of the planet.
However, far from prohibiting technology, they want to take control of it instead. For this, they have designed projects similar to cryptocurrencies called CBDCs, but unlike cryptocurrencies, centralized, so that the Central Bank has control of the money in circulation. That is, the same as a dollar and a euro, but now without cash backing it, as they're suggesting to totally take rid of the cash.
While the idea of a state-backed digital currency has been on the table for several years, the introduction of the concept by the People's Bank of China in late 2019 ushered in a new era in digital asset regulation. This was quickly followed by a series of similar announcements from other countries, and the market reacted accordingly.
By late 2022 and early 2023, not only China, but also the US Federal Reserve and the European Central Bank have joined the "race" to create centralized digital assets that compete against cryptocurrencies, but without the advantages that decentralization offers (and that in the first instance why Bitcoin was created). Both privacy and security rather than central control and continuous surveillance of your capital.
Something like: These are cryptos but without crypto. We call them "Old Fiat Inflationary Coins But Digital" to be trendy like you, fellow younglings.
The FTX case involves allegations of embezzlement by Sam Bankman-Fried, the company's CEO. From promising young genius to one of the reasons for the crypto winter. According to reports, Bankman-Fried is alleged to have defrauded his investors by using his money to finance Alameda Research. A company he would found years earlier in the Bahamas led by Caroline Ellison which is also involved. in embezzlement.
In four days, the company went from being the second most potent exchange in the world to being a bankrupt company. With missing capital and thousands of investors without knowing where their money was. This generated a domino effect in which other cryptocurrency companies and prices began to fall.
After being detained in the Bahamas, Samuel Bankman-Fried was extradited. Once in the United States, he was released the next day, after posting bail of 250 million dollars. The charges he is accused of are electronic fraud, money laundering, and violation of the financing laws of political campaigns. Which makes us wish he didn't "kill himself" like Jeffrey Epstein.
Even the most suspicious social media users have been raising Ellison's institutional involvement. Some of them point out that she could be related to active SEC agents. Her father would have worked with Gary Gensler at the Massachusetts Institute of Technology (MIT). Gensler is the Chair of the Securities and Exchange Commission (SEC) and has held various financial positions for the US government and companies such as Goldman Sachs. This, in turn, has tried to regulate and impose taxes on trading with crypto assets since September 2021 to these.
Many companies and investors have mixed ideas. Investors like Mark Cuban, who can't wait for these to drop in price to buy again. Or Kevin O'Leary who considers that they are "the alternative to a corrupt and inefficient banking system." Likewise, global banking institutions see them through a catastrophic lens. Going so far as to call the ecosystem "A nest of swindlers, bandits, and crooks." However, over time, we see that more and more institutions like J.P. Morgan buy more crypto at the same time criticizing it.
What is highly likely is that the crypto winter will happen. More than enough reason to buy USDT in Remitano and wait to buy the dip of Bitcoin.
