Bitcoin (BTC-USD) is experiencing a massive sell-off, shedding as much as 15% in the last 24 hours — the biggest intraday drop since February — days after hitting record highs. In late February, bitcoin saw a retreat to as low as $43,000 amid uncertainty in the traditional markets over stimulus expectations and their positive effects on US bond yields. The drop appears to coincide with reports that the US Treasury is planning to tackle financial institutions for money laundering carried out through digital assets. Source: Yahoo Finance
News came out that US will start to control the decentralized space of crypto-assets on the pretext of curbing money laundering activities. Will we see a massive drop in the prices of crypto-assets? One should have expected this to happen within a fairly reasonable period in the future, due to significant attention that these assets have been getting thus far. No central authorities in the world will sit on the side whilst crypto-assets continue to gain prominence among the citizens of the world. How do we tax crypto-based transactions? How do we monitor the flow of funds that can be done via global fungibility features of crypto-assets? Decentralized blockchain network will make the world like a borderless world, eroding the influence of central authorities across the world.
Personally, I have been keeping very small positions in some of these coins. I am anticipating regulatory intervention to come as soon as increasing market value of these crypto-assets starts to threaten the status quo of global financial / payment system. In this aspect, the US will do all its means to protect the status of its dollar as the global reserve currency.
One may wonder the question – whether this is it – the end of decentralised monetary system? Even central authorities start to introduce new regulations to control this space or even launch central banks-backed digital currencies, I believe the more likely scenario will be continuous parallel subsistence of different new forms of decentralised currencies even if BTC or ETH or LTC or XRP vanishes from this world (i.e “totally banned” or illegal). In creating a new ecosystem, we may see global organisations / communities issuing tokenised assets as new form of money. For example, hypothetically, we may see Starbucks issuing its “Macchiato” coins that can be used around the global chain to purchase coffee. Why the need for a new payment ecosystem = a possible alternative in event of a devaluation of central / fiat currencies.
In terms of price action, I am closely looking at certain key points which may support for a further downtrend for some of these coins.
What would I do – if all crypto-assets crash to the bottom….
Look at the asset that crypto-assets were intended to replace : GOLD
I will re-direct more allocation to gold, as I believe that there will be more in-flow of funds exiting from crypto-assets to the precious metal. As shown below, gold is rising….
Disclaimer: This is not an investment or trading advice / endorsement. Please refer to general disclaimer of this blog. If in doubt – please consult with your licensed financial planner or adviser.