Jon Cunliffe, Bank of England deputy governor, said investors in crypto should expect harder times, Reuters wrote Tuesday (May 17).
That will come as central banks raise interest rates, which are making it so safer assets are better bets.
Cunliffe, asked at a Wall Street Journal conference if rising interest rates would add pressure on crypto, said there would likely be a “move out of risky assets” as the process continues.
He also cited the conflict in Ukraine, which could make investors even more reticent.
“When there’s a move out of risky assets, you would expect the most speculative assets to be the ones most affected,” Cunliffe said.
Crypto has seen a lot of attention over its falling prices, dipping below $30,000 at points. Pundits have recently been saying they fear it could dip into the $22,000 to $24,000 range, compared to its $68,000 high from last November.
Almost all the big cryptocurrencies have been falling at similar levels, and they have been for a while as the fallout from the UST de-pegging continues.
The report notes the closeness of the top 100 cryptos’ 24-hour and seven-day price charts, close enough to be “a cut-and-paste” job.
Bitcoin had been seen as a hedge against inflation, in that it would behave different than the equity markets in a downturn. But that didn’t turn out to be true — instead it was more like an investment people bought when it was booming, but are abandoning now that the economy seems to be hurtling toward a recession.
Altcoins might not be safe either, with blockchains likely to not behave very differently if a downturn comes.