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Crypto market takes a dip

Crypto market takes a dip

Crypto market takes a dip

Image Courtesy: File

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KARACHI: Cryptocurrency prices went on another roller coaster this past year: surging, plunging and then cycling again. This price move trend usually comes from spot market manipulations by option sellers (mostly institutional traders) to push the spot price closer to the strike price at which the highest number of open options contracts expire worthlessly.

Bitcoin, the most popular digital token had fallen about 30 per cent over the past five weeks after setting a record high of almost $69,000 in early November. News that the central banks around the globe are considering tighter monetary policy had weighed on risk appetite over the last few weeks.

Governments around the world have been looking at adopting, regulating and even banning cryptocurrencies since the inception of Bitcoin. Ever since, the crypto ecosystem has been a rocket ship ride to the moon and back. Today, it seems that more people than ever have hopped on for the ride.

A massive shift toward digital platforms across all industries has also been seen as a result of the pandemic. Political leaders globally have followed suit by taking steps to move their economies in the same direction.

One of the most recent examples is El Salvador, which made headlines by becoming the first country to adopt Bitcoin as legal tender, a move that has since been protested by its citizens.

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In the initial announcement, the country’s president directly connected crypto as a competitor to remittances, noting this would increase the amount of money low-income families in El Salvador receive from remittances by the “equivalent of billions of dollars every year.”

Digital currencies are certainly an additive factor, and crypto will no doubt have an impact in the years to come. But it will take time, and there are several headwinds to mainstream adoption and displacing cash for the millions of families who continue to rely on it.

Cryptocurrency transfers currently are not a cheaper, faster or easier alternative than cash, particularly considering the complexities of converting crypto to/from local currencies.

Many countries have yet to recognise or provide legal pathways for cryptocurrency trading/payments, including the United States.

Although well-known figures and celebrities such as Jack Dorsey, founder of Twitter, and Elon Musk, founder of Tesla, have come out in defence of the use of the new monetary technology, cryptocurrencies continue to divide opinions.

Their high volatility makes them a very uncertain investment; that there is no authority means that no one guarantees the investment; and the fact that they are used to make illegal purchases and cyber crime has given them a bad reputation.

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Meanwhile, Binance has been given an in-principle licence by the Central Bank of Bahrain. This is a permit to allow the cryptocurrency exchange to operate as a crypto asset service provider in the country.

As per CoinTelegraph, if the Kingdom of Bahrain fully approves the application, it will be the first regulatory approval for a Binance operation in the Middle East and North Africa region.

Forbes reported that Binance was also accepted in Canada and this was personally announced by Zhao through social media. He said that a separate entity of Binance has been registered with the Financial Transactions and Reports Analysis Centre of Canada, the region’s financial intelligence agency.

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