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With bitcoin and its fellow digital currencies in the tank, we check in on the latest crypto news and views.
We aren’t going to say we told you so, but was anyone that shocked to see the global cryptocurrency market plunge by more than US$1 trillion?
After hitting an all-time high of close to US$69,000 last November, bitcoin lost more than half of its value, falling below US$33,000. Last time we checked, the digital currency was enjoying a rebound that took it to US$37,000. Still a bargain for some, perhaps.
Against that troubling backdrop, we fired up the search engine to see what’s new in the world of crypto. Even if you don’t know your bitcoin from your blockchain, we hope you find this roundup useful and entertaining.
So what the hell happened? That’s the trillion-dollar question. At Slate, Aaron Mak offers a few possible explanations for the crypto crash. One theory: bitcoin’s decline could be part of a bigger story that has seen stock markets slide since the start of 2022. “As more traditional investors have gotten involved in cryptocurrency over the last two years, the stock and Bitcoin markets have become increasingly linked,” Mak writes. “The specter of forthcoming regulation could also be spooking investors, since the Biden administration is expected to release a federal strategy on cryptocurrency next month.”
Think the current cryptocurrency selloff is bad? It could get even worse, according to CNBC. Some investors and observers think “crypto winter” has already arrived, while others are calling for frost. “Over the last year—especially with all the hype in this market—a lot of developers seem to have been distracted by the easy gains from speculation in NFTs [non-fungible tokens] and other digital assets,” said Nadya Ivanova of research firm L’Atelier. “A cooling off period might actually be an opportunity to start building the fundamentals of the market.”
Surprise, surprise: cryptocurrency fraudsters are preying on Canadians. Just ask the Quebec man who recently lost $141,000 in what police are investigating as a scam. “It’s kind of the Wild West in the crypto asset market right now,” Wes Lafortune, spokesperson for the Better Business Bureau Serving Southern Alberta and East Kootenay, told Global News. “It’s a big problem. It’s exploding.”
The grim investment climate is one thing, but if you haven’t heard, cryptocurrency is bad for the actual climate, too. That doesn’t seem to bother Alberta Premier Jason Kenney, whom this National Observer op-ed skewers for being late to the party with his plans to attract crypto jobs to the province. Max Fawcett also points out that bitcoin mining “consumes 121.36 terawatt-hours of electricity per year, more than Google, Apple, Facebook and Microsoft combined,” according to a University of Cambridge study.
To hear some investors tell it, rising inflation and a likely U.S. interest rate hike are good reasons to take a chance on crypto. Amy Legate-Wolf, writing for The Motley Fool, suggests capitalizing on recent price drops by picking up some Ethereum and bitcoin. “Having a coin that can be used anywhere in the world offers you a chance to use today’s fall in price to bulk up,” Legate-Wolf argues. “As the market rebounds, and companies invest in cryptocurrency once more, you can use these coins decades from now no matter what happens in the future.”
READ MORE: B.C. crypto exchange volunteers to be regulated, setting precedent
On the other side of the, uh, coin, Lisa Pauline Mattackal and Medha Singh of Reuters don’t sound convinced that cryptocurrency is a good inflation hedge. The pair start by noting that thanks to big institutional bets on bitcoin, the currency has grown sensitive to interest rates. “Bitcoin is also often regarded as a hedge against inflation, mainly due to its limited supply akin to gold, the more-established store of value in an inflationary environment, they add. “However, its correlation with stocks has seen it become increasingly roiled along with broader markets by the largest annual rise in U.S. inflation in nearly four decades.”
With lobbyists gearing up to help major cryptocurrency owners convert their digital holdings to real money, the Wall Street Journal is having none of it. “They are looking for a way to spin their crypto straw into gold,” write Steven Hanke and Matt Sekerke. “Lawmakers and regulators should ignore the hype,” they add, casting blockchain “innovation” as overblown. “The crypto ecosystem merely mirrors, electronically and anonymously, the most rudimentary components of the regulated financial system,” Hanke and Sekerke maintain. “The putative gains are quickly dissipated by crypto’s many weaknesses.
What goes around comes around. Showing how with it he is, Eric Trump just discovered that somebody created a cryptocurrency called TrumpCoin. The currency, which first surfaced in 2016 and has nothing to do with the infamous former U.S. president, has drawn threats of legal action from the younger Trump. He should know a grift when he sees one.
Rather not risk buying cryptocurrency, but still want to get into the market? Farnoosh Torabi of CNet has some suggestions. For starters, go work for a crypto company. You could also consider investing in stablecoin, described as “cryptocurrency with twist” by Torabi’s colleague Julian Dossett: “Instead of being mined’ by an open, distributed network of computers performing a combination of math and record-keeping, a stablecoin derives its price from the value of another asset. In short, a stablecoin is pegged to some other underlying asset.”
By the look of it, video game developers aren’t ready to jump on the crypto bandwagon. Just ask the Game Developers Conference, which recently published its 2022 State of the Game Industry survey. When asked about their studios’ interest in cryptocurrency as a payment tool, 72 percent of respondents said they couldn’t care less. Meanwhile, 70 percent said they have no interest in NFTs. “How this hasn’t been identified as a pyramid scheme is beyond me,” read one anonymous comment reported by Kotaku. “It’s the wave of the future,” ventured a somewhat more bullish respondent. We’ll see how things play out.