The crypto market built on cheap money looks set for an epic collapse as central banks warn to prepare for steep rate rises.
Cryptocurrencies could be on the brink of collapse and confirmed as history’s craziest asset bubble, as central bankers signal their determination to aggressively lift cash rates in a non-negotiable fight to control runaway food and energy price inflation.who held crypto in 2021 as a seven-month bear market that’s delivered history’s largest and fastest wealth wipeout – $US2 trillion – threatens to accelerate.
This shows how crypto could extend losses as the macro environment normalises and as crypto has failed to establish itself as a hedge against inflation, store of value like gold, or payment method for goods and services akin to money.Gold, for example, has climbed around 3 per cent from $US1792 an ounce on November 1 to $US1849 an ounce on Friday to show its utility as a store of value in times of financial crisis or soaring inflation, while bitcoin has plunged 64 per cent over the same period.
However, Celcius is one of hundreds of DeFi businesses that offer double-digit interest rates on deposits, with little disclosure on how this kind of financial alchemy is achieved and zero regulatory protection for depositors.Given the lack of regulation, DeFi depositors often look reliant on the goodwill of product providers not to rip them off, or steal their funds with no guarantee deposits are safe.
The industry turmoil came over the same horror week Microsoft founder Bill Gates said cryptocurrencies and non-fungible tokens are “100 per cent based on greater fool theory.” In Australia popular buy now, pay later and tech stocks like Zip Co and Sezzle surged to prices above $14 a share and $11 a share respectively, but both have slumped 95 per cent since.