Market Turbulence Can’t Shake Up Crypto Fundamentals
We've seen a lot of weakness in crypto over the last week. Not surprising considering regulatory pressure ramping up in the U.S. and China’s latest crypto ban spreading fear and panic in the markets.
But none of this means crypto’s days are numbered. In fact, as my favorite detective — Hercule Poirot —would say: “Au contraire, mon ami”.
We’ve got an equal amount of good news and achievements in the crypto market. It’s now more obvious than ever that crypto is here to stay ... and that traditional financial system has lived way past its expiry date.
First piece of good news comes from Cardano (ADA, Tech/Adoption Grade “B-”):
As you know, stablecoins are the best way to trade in and out of a volatile market. But for Cardano, Djed comes with additional advantages such as keeping transaction costs predictable, which is a big problem nowadays.
Stability for Djed doesn’t come from it being pegged to a fiat asset. Instead, it relies on an algorithm that ensures the price stability by issuing coins (when high) and buying coins (when low) to keep the price stable.
One thing to be weary of with Djed — and all stablecoins actually — is the regulatory environment.
Under the guise of “investor protection,” the SEC Chair Gary Gensler has threatened to equate stablecoins to unregistered securities. If he gets away with it, a number of exchanges would be forced to remove these coins from trading, greatly affecting their price as well as their viability.
Luckily, not all politicians are equally ignorant. Some have even stepped up in their criticism of SEC Chair’s recent action:
But Gensler isn’t the only policymaker failing to understand the consequences of their regulations. Treasury Secretary Janet Yellen proposed taxation of unrealized capital gains. An unrealized gain is an increase in the value of an asset or investment that an investor holds but has not yet sold for cash.
This type of taxation would have horrendous consequences that go far beyond cryptocurrency markets they seek to regulate:
As we point out in our tweet, such a policy could push businesses and investors out of the country, thus relieving the U.S. of any taxes it would have received otherwise.
It will also severely punish and even push into poverty those not “savvy” enough to circumvent these rigid limitations, as it would cut off an important source of wealth generation for them.
Altogether, if this came to pass, it wouldn’t be too different from China’s current situation. Speaking of which:
Pushing crypto underground is like throwing a fish back into the ocean. Good luck catching it again.
Crypto was born out of necessity and is endorsed by those who wish to outlast and sidestep the disastrous fall of traditional financial institutions. They won’t be deterred by draconian laws and authoritarian regimes. They’ll thrive in spite of them.
Even Elon Musk agrees:
The crypto revolution is unstoppable. There may be kinks on the road, but it’s clear this is a fight the formal financial establishment won’t be able to win.
Recently, Coinbase Global (Nasdaq: COIN) took a big step towards this inevitability:
Banks still have time to make the “if you can’t beat them, join them” move. If they do pivot over to the crypto side, they can become a part of history. If they don’t, chances are the advent of central bank digital currencies (CBDCs) will render them obsolete anyway.
As you can see, the last week was pretty turbulent. Still, the broad market hasn’t reacted strongly to the negative news. That’s because there are many reasons to be optimistic ... and investors know it.
But we’ve come to realize there’s still a lot that casual investors might not know about the current crypto market. And that could be costly.
That’s why our founder, Dr. Martin Weiss, has set up a LIVE Q&A session this coming Tuesday, Oct. 5 at 2 p.m. Eastern. There, he’ll answer all your questions in real time, no punches pulled.
So, if you have questions about the fundamentals of crypto, the decentralized finance (DeFi) revolution, the “parabolic” cycle we believe is at our doorstep or how to best position yourself for the potentially massive profits it will yield, then sign up, submit your questions and tune in on Tuesday.
In the meantime, stay vigilant, follow our daily updates and don’t forget to drop by our Twitter channel and stay tuned for all things crypto. The best is yet to come.
Until then, stay safe and trade well.
Jurica Dujmović
