Estonia’s Bank Governor Shares Sincere Skepticism on the Future of Cryptocurrencies
The year has begun with hopes in the crypto market after prices surged gradually over the last week. However, this reversal is yet to convince all stakeholders within the Financial markets about the probable success of digital currencies in the near future.
One of the most recent prominent figures to criticize the digital assets is Estonia’s Bank governor. Ardo Hansson who also holds a position in EU’s Central bank governance was of the opinion that cryptocurrencies are yet to hit their lowest low. These sentiments were echoed during a Latvia conference whose theme was “Five years with the Euro”. He added that the collapse of crypto coin bubble was already evident over 2018 and would only be inevitable if the market forces settle on new altcoin prices.
“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,”
The past two years have been quite interesting for crypto with both acting as proof of this market’s high volatility. Back in 2017, newbies were scrambling to buy BTC and other altcoins which eventually caused the market to rally significantly. In that year, the crypto market cap was $187 million shy the $trillion mark. However, this model was not sustainable as we entered 2018 hence the massive bloodbath that left the market cap below $150 billion.
Crypto Correlation Insignificance With Financial Markets
Earlier on, Hansson had compared the cryptocurrency market dynamics to the Tulip bubble that happened over 3 centuries ago. This was back when BTC was almost at the $20,000 mark and most of the stakeholders were bullish and thrilled by the ability of digital assets to move up so quickly. However, the brighter side of this scenario according to Hansson is the insignificant effect of crypto’s dynamics on the world’s financial markets.
Hansson’s analysis of this argument is supported by several points that include low volumes moving within coin markets. Furthermore, the proceeds used to acquire digital assets are not correlated to financial products such as loans owing to the uncertain regulatory environment. It simply means that in case of a market crash, only the consumers & investors will be affected with minimal spillage if any to other sectors.
Another issue that Hansson touched on was the integration of regulators with crypto related matters. The risk posed with these moves is exposing an uninformed market too complex assets whose probability of losing all value is quite high.
It was clear that Hansson’s sentiments did not target a specific crypto coin but the general digital asset market. However, some crypto enthusiasts and new sources have misquoted this information to label the Estonia bank governor anti-Bitcoin.