Cryptocurrencies Bubble Burst To Persist: ECB Policy Marker
Cryptocurrencies are going to zero. Those are the sentiments echoed by the European Central Bank policy marker Ardo Hansson. According to the policy marker, it is no longer a matter of whether but how far the bubble will collapse after the recent price implosion.
Cryptocurrency Bubble Collapse
The ECB policy marker who also doubles up as the Estonian central bank governor believes the bubble has already started to collapse. The Estonian governor made the remarks in a conference in Latvia.
“The bubble has already started to collapse, and maybe we should just see how far this collapse goes, and what is left when we’ve reached a new kind of equilibrium. I think we will come back a few years from now and say how could we ever have gotten into this situation where we believed this kind of a fairy-tale story,” said Mr. Hansson
The remarks come amidst growing uncertainty in the cryptocurrency sector. A good number of cryptocurrencies have shed more than two-thirds of their market value, over the past year, the sector having turned bearish.
Bitcoin (BTC), which was flying high at the peak of crypto boom has already shed more than 70% in value after imploding from record highs of $20,000. The flagship cryptocurrencies has seen its sentiments turn sour, in recent months, having plunged below the $4,000 level. Ethereum (ETH) another flagship cryptocurrency has also shed more than 70% in market value at the back of a ferocious sell-off wave.
Calls For Investors Protection
Amidst the turmoil in the volatile sector, Hansson believes regulators around the world have a role to play as the bubble continues to burst. For starters, he expects authorities to pay more attention on investor protection, given that people are still investing in the sector amidst the turmoil.
The Central Bank governor also expects regulators to put frameworks in place to combat the use of cryptocurrencies for illegal activities. In the recent past, there have been concerns that people are using virtual currencies for money laundering purposes. The use of cryptocurrencies to finance terrorist activities is another emerging issue.
Estonia top financial watchdog has already issued licenses to over 400 cryptocurrency exchanges. In addition, the regulator has also given more than 400 companies the green light to offer crypto wallet services. Amidst the positive gesture, the watchdog still insists companies offering crypto assets act as a source of money laundering risks.