Are cryptocurrencies less scary? At least the potential risks that have remained with them, rightly or wrongly, since Bitcoin has intruded on the financial landscape and especially since they have gained increasing popularity. According to a report by the Federal Reserve Bank of New York, it would seem so. In question, a less cheerful macroeconomic environment that eclipses cryptocurrencies in terms of risk in 2022.
Cryptocurrencies are among the top 10 threats that can lead to instability in the US economic system
While the keepers of the traditional monetary order remain suspicious of Bitcoin and the like, an investigation by the US central bank, specifically its New York unit, reveals that cryptocurrencies are no longer seen as a major threat to the financial stability of the US economy. Before the “crypto” risk, 11 other factors seem to be more worrying in this area.
At the forefront is the Russian invasion of Ukraine, followed by persistent inflation and monetary tightening. In third place of the podium we cite the corrections of risky assets, excluding cryptocurrencies which are classified separately with stablecoins, and which overall arrive only in 12th position with regard to the perception of the risk posed.. Remember that in its effort to regulate the cryptocurrency industry, the US regulator has consistently brandished the threat of stablecoins as potential providers of monetary instability.
The opacity surrounding their reserve assets appears at the forefront of concerns, with the threat of a race that could cause a cataclysm. A danger all the more conceivable as the supply of stablecoins has grown exponentially and since the catastrophic episode of the UST algorithmic stablecoin, which took billions of dollars in its sinking and the cascading bankruptcy of cryptocurrency companies, updated the threat.
Except that, according to the rule of evil for good, the main stablecoins in the market, backed by the dollar, it must be remembered, have since shown greater transparency, such as the USDT sulfur leader who does not end up wanting to ride the white paw.
The macro background overshadows cryptocurrencies
The fact is that the potential danger they represent takes a back seat. Internally through monetary policy “Hawkish”, the Fed raises interest rates to levels never seen since the 1980s to fight inflation. And for a tense international contextin particular the Sino-American tension, and the consequences more or less attributable to the Russian-Ukrainian war such as the increase in energy prices.
However, the US central bank maintains its critical bias towards cryptocurrencies when it comes to investing, with the report highlighting losses hovering around 70% for the market majors.
Speculation and risk appetite appear to be the main drivers of cryptocurrency prices, which have seen sharp fluctuations in recent years.
New York Fed Report
Cryptocurrencies, a consumer risk, remain a refrain for central bankers eager to moderate the buy-in they get. It is a pity, if at the same time the fiduciary currencies are not doing well against the dollar, like the euro.
And we also pass in silence the fact that tech giants have had as many, if not more epic, crashesmobilizing only on the “crypto” risk.
Sure, the atmosphere is gloomy, but it is undoubtedly the right time to venture into the world of cryptocurrencies proceeding in a prudent and informed manner (train!). Also, if you feel ready, don’t wait any longer to sign up for the Bytbit exchange (trade link).