Cryptocurrencies are looking increasingly fragile. Speculative at best, it now seems some powerful forces are trying to limit their impact.
Recent stories about cryptocurrencies paint a tale of huge risk, huge reward and potentially a major crashing noise.
Elon Musk is not helping. He has enough influence to affect the price significantly. When he announced that Telsa would accept Bitcoin (and Dogecoin), the price soared. It was, according to Richard Windsor, a classic ‘pump and dump’ and for one person to be able to make or break cryptocurrencies should be cause for concern – for a number of reasons.
And concern it has certainly caused.
Windsor believes that investors will be angry that Tesla would accept such a wildly speculative payment option (and the finance department probably had sleepless nights as well). And the whole Bitcoin/Tesla confusion was almost certainly responsible for the company making its financial targets.
Both China and India have come out against their financial institutions dealing with cryptocurrencies.
China has imposed an official ban, and financial industry bodies have made a statement, saying, “Recently, cryptocurrency prices have skyrocketed and plummeted, and speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of people’s property and disrupting the normal economic and financial order.”
Meanwhile, India is urging its financial institutions to do the same and “even though the discussions are informal, that is enough. No one wants to go against the regulator,” according to a source close to the situation.
The volatility of cryptocurrencies is extraordinary, and their history no less so. Over the years, news stories have marvelled at Bitcoin hitting $10,000, then sighing as it sank, celebrating as it hit $20,000 and exclaiming in disbelief as it hit $40,000 then $50,000.
Now it has sunk, partly due to the news from China and India and partly, you would expect, from a general nervousness from being toyed with by Musk.
Whatever the fate of cryptocurrencies over the next few months and years, the ride will get wilder, and the speculation and risk will get worse.
Unless you like that kind of thing.