The largest Bank of Switzerland, UBS, has issued a warning regarding crypto winter, where prices will crash and may not recover for years. Several major reasons that have affected the price of cryptocurrencies were also discussed by the bank.
Crypto Winter That Last For Years
UBS, the largest bank of Switzerland has issued a warning regarding crypto winter where crashed prices may not recover for years. Several reasons were also explained by the bank stating why cryptocurrency may lose the interest of investors this year.
The first reason is the interest rates hikes by Federal reserves, this is expected to reduce the interest of investors who see cryptocurrencies especially Bitcoin as an asset class and a good alternative for a store of value.
James Malcolm, an analyst at UBS, said that if inflation is tried to be controlled, Bitcoin holdings may reduce as a protection against rising prices. This year it is expected that the feds will raise the interest rates many times.
The analyst further added that investors have started to realize that Bitcoin is not “better money” because of its high volatility. Also, the limited supply of Bitcoin makes it inflexible as a currency.
The UBS team described that for cryptocurrency one of the hurdles is regulation. The interest and the financial stability of users must be protected. In this regard, Stablecoins and DeFi (decentralized finance) projects will inevitably witness huge setbacks from authorities.
A government-wide strategy for cryptocurrency is being drafted by the US government; making regulating crypto exchanges their top priority.
Disclaimer: The article should not be considered as any financial advice. It is advisable to conduct thorough research before investing.
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