The war in Ukraine is accelerating pressures to regulate cryptocurrencies in the world. As a consequence, intestinal tensions are taking place that herald changes. For some, the time has come to bring out dormant assets. For others, the context is suitable to resume purchase positions in the face of possible revaluations. However, there are no certainties around cryptocurrencies.
The evolution of the last year clearly denotes the volatility of the prices of all cryptocurrencies, and of bitcoin and ethereum in particular. The price of both cryptos is around 30% below the maximum, with wide fluctuation bands.
What was born as an experiment has become consolidated as a financial escape valve, a parallel movement of resources, a redoubt of assets of innovative pioneers, a refuge from uncertainties, pure speculation and a focus of capital gains of unspeakable origin.
Bitcoin owners have been reluctant to see their fortunes for years, as the Treasury is keeping an eye on them. Among the digital currencies, only two of them have sufficient capitalization to have a systemic impact, bitcoin and ethereum. Victoria Gago, co-founder of the European Blockchain Convention and the European Tech School, assures that “there are more and more people with more money invested in cryptocurrencies, especially in bitcoin (42% of the total crypto market) and ethereum (19%)”. The capitalization or value of what is invested in these two digital currencies is 1.3 trillion dollars (1.3 million million). The trend, according to gago, is that the owners of cryptocurrencies do not want to sell but also want to take advantage of their asset for other investments or their daily lives. For this reason, he believes, loan offers that accept these cryptocurrencies as collateral will grow.
Those financial products are complex. It is possible to obtain a loan in euros backed by 150% of the loan in bitcoin, for example. In exchange, interest rates of between 7% and 20% are required. It is convenient for customers to have more bitcoins, with the aim of being able to support the operation with a live balance of cryptocurrencies of a value always equivalent to that 150% of what remains to be returned. It is also expected that NFTs (digital property rights) will be accepted as collateral for loans in the future. madonna is the latest celebrity to enter the world of digital assets. She has purchased an NFT from the Bored Aped Yatch Club collection. She has paid with cryptocurrencies and hopes to sell in dollars.
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According parrondo light, director of the Blockchain postgraduate course at the Barcelona School of Management, the war in Ukraine and the implementation of sanctions on Russian capital have shown that decentralized finance reduces the effect of any blockade. Movements are accelerating to curtail cryptocurrency operations. Cryptocurrency service providers are the focus of investigations, but the blockchain system itself makes controls difficult, since blocking addresses is ineffective.
Cryptocurrencies insulate citizens from runaway inflation, bank collapse, and expropriation. They may not be a safe haven, but they have confirmed their usefulness at times when a war, for example, means putting limits on citizens’ private property.