Has the Bitcoin and crypto crash been planned a long time ago to implement crypto regulations? Report
- The recent fall in the price of crypto assets is linked to strict crypto regulatory enforcement, with stakeholders citing a plan to crash the industry.
- Will the Ripple-SEC Case Make or Break the crypto market?
Cryptocurrencies and virtual assets are volatile. Unfortunately, there is no two-way about this because it has a frequent pattern of boom and bust, which has left many wondering whether it is worth investing in them. However, there are murmurs about the industry’s instability, hinting at a long-term plan to implement crypto regulations. Let us dive into some recent happenings that have led to these murmurs.
The value of Bitcoin, the famous “digital gold,” was down by more than 90 percent from its previous all-time high of $69,000 in 2021. Bitcoin’s price plunged below $16,000 in November 2022, showing a disturbing trend that has continued to grace the market. In addition, the broader digital currency ecosystem is on a downward trend. So the question is, what triggered the decline?
Bitcoin and other crypto assets, for most of 2022, have been performing woefully and having a tumultuous time in recent weeks. However, macroeconomic events, like the Russian-Ukraine war, the hike in interest rates, and rising inflation, affect the crypto industry.
The cryptocurrency slump in November was triggered by the FTX crash, one of the leading crypto exchanges in the world. The FTX situation has impacted the digital asset space due to its massive daily transaction volume of nearly $1 billion daily.
The Celsius Network collapse of June 2022 happened after Bitcoin fell to less than $20,000, sending panic among market participants. As a result, the US-based crypto exchange froze withdrawals and trades, citing “extreme” market conditions. The event fueled a massive slump across the digital currency ecosystem, with the industry’s value plummeting under $1 trillion.
Others cite China’s crackdown on crypto trading as why the price of crypto assets continues to tumble. The rumors about Russia halting crypto trade also contributed to the slump. In addition to the above, the massive sell-offs of key crypto tokens have continued to trigger fears and further sell-offs, with consumers’ confidence at its lowest.
Are crypto regulations responsible for the price crash?
One of the most recent discussions around the constant fall in the price of cryptocurrencies is the action by regulators. Unfortunately, regulators’ threat to implement strict guidelines will continue to push the value of digital assets down. Several incidents have influenced the perceptions of industry players about a grand scheme by regulators to enforce new rules and drive the prices of crypto assets down.
At the start of the year, reports indicated that Russia was considering banning crypto transactions. However, after it invaded Ukraine, there were strong calls for crypto exchanges to remove Russia from their platforms.
After the statement from Elon Musk in May 2021 that Tesla would no longer accept payment in Bitcoin over concerns about the environmental impact of crypto mining, the price of Bitcoin slipped further. Then, in June 2022, the world’s largest crypto exchange, Binance, temporarily paused Bitcoin withdrawals, with the CEO stating that a bug was responsible for a “transaction backlog.”
Meanwhile, the FTX exchange is currently in a rough patch after Binance pulled out of a deal to accelerate the recovery plan of the embattled firm. According to reports, FTX has filed a Chapter 11 bankruptcy claim in the United States following its liquidity crisis.
In another twist of the event, a US republican lawmaker, Tom Emmer, has accused the Securities and Exchange Commission (SEC) led by Gary Gensler of siding with the embattled CEO of FTX, Sam Bankman-Fried. The lawmaker alleges that both parties are exploring regulatory loopholes to keep the exchange off any regulatory hook.
Interesting. @GaryGensler runs to the media while reports to my office allege he was helping SBF and FTX work on legal loopholes to obtain a regulatory monopoly. We’re looking into this. https://t.co/SznowgcP6V
— Tom Emmer (@RepTomEmmer) November 10, 2022
In a November 10 Twitter post, the lawmaker asserted the SEC chair is helping Bankman-Fried to take advantage of any legal loophole to enable FTX to survive its current liquidity crunch. He also said he is looking into the situation to ensure justice is served. Emmer revealed that there needed to be more information regarding the meeting brief between Gensler and officials of FTX submitted to his office.
The Terra LUNA ecosystem’s collapse negatively impacted the virtual asset environment as regulatory agencies stepped up their oversight of this industry. Governments worldwide continue to take various steps to implement tighter regulations for the fledgling industry.
The Ripple-SEC Case And The Crypto Market
Meanwhile, the ongoing Ripple-SEC saga is seen as the conclusion of a long-term plan to implement more strict regulations on the crypto industry or, worse, stop crypto-related trade in some countries.
After the SEC dropped the hammer on Ripple in December 2020 by suing the blockchain firm, the agency changed the public’s view of the rising asset and its parent company.
Various questions continue to arise. Questions such as, “What will be the impact of the case on Ripple’s success?” Is Ripple another scam? All these and many more are some of the questions that need answers as the case continues to make the news.
Ripple’s operation with significant banks within the US did little to dispel the SEC’s perception of the firm. As a result, the company is still making a case for XRP despite its multiple uses in facilitating transactions in the traditional financial and crypto spaces.
Unfortunately, the SEC sees XRP as another fanciful financial product set to explode soon, given the volatility of crypto assets. However, analysts believe the Ripple case is a test of strength for the SEC, which has been accused of using regulations to harass crypto businesses.
Should the commission win, this might spell another looming issue for other crypto firms. If it lost, it would be a massive blow to the status of America’s top securities watchdog. But, whatever the outcome, experts see the case as determining Ripple’s fate and the crypto industry’s future.