17/06/2022 - S & T

KEY POINTS

·        Ethereum, another cryptocurrency popular among investors, has lost almost 80% from its peak.

·        The crash, which shows no signs of reversal yet, seems to have led to a drop in investor enthusiasm with trading volumes in Indian cryptocurrency exchanges dropping by 90% from their peak.

·        As central banks withdraw liquidity from the market, there’s less money chasing assets, which in turn causes the prices of assets to drop. Others believe that the crash could also mark the popping of the bubble that has driven the prices of cryptocurrencies to stratospheric levels.

·        While countries such as China and Russia have opted to impose outright bans on cryptocurrencies, others such as India have tried to tax and regulate them heavily.

·        In India, while the government has not imposed an outright ban on cryptocurrencies, the Reserve Bank of India has been quite vocal about the need to ban them completely.

·        Crypto-enthusiasts, however, argue that while cryptocurrencies may not be widely accepted as a currency, they still represent an independent asset class like gold that can help investors protect their wealth from central banks.

·        No cryptocurrency has such a record. The fact that precious metals are limited in supply definitely helped boost their value. But limited supply alone cannot make cryptocurrencies like Bitcoin a valuable asset like gold and silver.

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