As we have seen all year, inflation creates havoc in all parts of economic activity. It’s becoming a bigger concern and is now having a very visible negative impact in the cryptoshere. Global market volatility has seen a sharp increase and the tremors are felt all over. Delma Wilson, B2B Content Marketer, imparts some well needed knowledge in this area in the article following.
What a week! Its May or Mayhem? The markets continued to crash the whole week without any relief, which was fueled by weak global cues from the US market, the Luna fiasco, as well as the devaluation of the rupee against the dollar.
It has affected all the major sectors and the crypto industry is also facing the heat waves of the global market volatility. The volatility index has risen by more than 20% in the last two weeks, indicating a continuing rise in general uncertainty.
The present volatility and big declines, which have wiped hundreds of billions of dollars from the market, are meant to be a routine stress test for the cryptosphere, according to several industry experts.
Let’s find out why this stress test is so important for market stability?
According to Celsius CEO Alex Mashinsky in his recent interview, the industry goes through such stress test, it’s a real scenario, a real stress test, unlike banks who monitor it on an excel spreadsheet once or twice a year.
He further added that stress tests are good for any market condition as they eliminate leverage so only those with long-term plans stay. It’s a paradigm shift from weak hands to strong hands to make the market stable.
“Our industry goes through a stress test, a real stress test, not like the banks that they do it on an Excel spreadsheet once or twice a year. You have to think about this as another stress test…
These stress tests are beneficial… they actually take out all of the industry excess. It eliminates leverage. Diminishes the weak hands. Basically, it’s like transferring your coins from weak hands to strong hands, and they build an empire. Again, I’m hoping that we establish this $25,000 as the new basis for Bitcoin, and every time we go through these things, as you can see, we created a higher high, which we essentially defend throughout time.”
Do we need to worry about the upcoming inflation rate?
Well, that’s a heated topic in the space as stated by Mashinsky this entire crypto market volatility depends on the upcoming inflation numbers and is also one of the major causes behind market conditions globally.
So who can curb the inflation?
Mashinsky has laid down his belief on the Federal Reserve to do what it can to curb inflation, otherwise it will create an unhealthy environment for risk-on assets like cryptocurrencies. He believes that inflation will ruin everything if it ever comes again and hence a preventive measure is what the FED should work upon.
“Inflation is like a beast. You can’t put it back in the Pandora box once it’s out, so we may have to chop a lot of heads to eliminate inflation and win over it.”
The Magnitude of the Latest Downside
Though inflation is not new and many countries are fighting it for ages. Being the survivor of inflation Mashinsky doesn’t want to arrive at such a situation and warns the investors and the FED to take measures soon as FED is committed to lowering inflation at any cost.
I was born and raised in Israel, where we had 400 percent inflation… Every day, prices fluctuated. We don’t want that, and the Fed is largely dedicated to fighting inflation. They don’t care about the consequences for Bitcoin, the stock market, or anything else; it’s their top concern. That is why it is critical to see those figures decrease. Everything I’m saying assumes that the next set of figures on inflation, or CPI, will be lower rather than greater.”
Via this site