The collapse of the Bitcoin bubble is inevitable.
As of February 6, the latest price of Bitcoin was $41,485.1. Although it has rebounded from the recent low, it is still close to halving from the all-time high of $69,040 in November last year. This continues to suffer for investors who are still fluttering in the currency circle.
Chinese experts say cryptocurrencies are risky
Pan Helin, executive dean of the Institute of Digital Economy of Zhongnan University of Economics and Law, said that Bitcoin is expected to enter a recession in the next few years, and countries have further strengthened the supervision of cryptocurrencies recently.
Yin Zhentao, director of the Financial Technology Research Office of the Institute of Finance, Chinese Academy of Social Sciences, reminded that the most essential difference between cryptocurrencies such as Bitcoin and traditional currencies is that it is a virtual commodity rather than currency. “Historically, any digital cryptocurrency that is out of regulation has not obtained the right to circulate, and it is very risky to operate, and it is bound to not survive for a long time.”
Global tightening of bitcoin regulation
In the environment of increasing regulatory efforts around the world, many institutions have been bearish on Bitcoin. The forecast of the top ten events in 2022 recently released by the American asset management giant Invesco Group shows that the Bitcoin bubble will burst in the coming year, and the price may plummet all the way below $30,000.
On February 4, local time, Gensler, chairman of the U.S. Securities and Exchange Commission (SEC), said that although there is currently no clear proposal for cryptocurrencies, regulation will be actively implemented in his jurisdiction. Such as the refusal to approve a Bitcoin ETF, on the grounds that Bitcoin is vulnerable to fraud and manipulation.
According to Xinhua News Agency, on January 25, the Executive Board of the International Monetary Fund (IMF) urged the Central American country El Salvador to cancel the legal tender status of Bitcoin, warning that the use of Bitcoin poses great risks in terms of financial stability and other aspects.
The IMF Executive Board issued a statement after concluding its Article IV consultations in El Salvador, saying that the Executive Directors believe there is a need for greater regulation of Bitcoin, whose use poses risks to financial stability, financial integrity, consumer protection, and related fiscal and debt obligations , urging the authorities of El Salvador to remove Bitcoin’s legal tender status. Some executive directors expressed concern about the risks of issuing bitcoin-backed bonds.
El Salvador’s parliament passed a bill in June last year approving bitcoin as the country’s legal tender. The bill came into effect last September, and El Salvador became the first country in the world to officially recognize Bitcoin as legal tender. El Salvador’s government also plans to issue bitcoin bonds in 2022. Due to the large fluctuations in the value of bitcoin, the difficulty of practical operation, and the chaos of financial supervision, many people in El Salvador are opposed to making bitcoin legal tender.
On January 20, Russia’s central bank said it would propose a ban on cryptocurrency trading and mining, with the intention of banning all cryptocurrency-related businesses in the country. At almost the same time, regulatory agencies in the United Kingdom, Spain, and Singapore have also expressed their desire to strengthen the regulation and control of the promotion of encrypted assets.