How can one protect their retirement funds from the crypto crash? Congress on digital assets, and there is ongoing work on central bank digital currency, a digital U.S. Regulatory agencies are evaluating digital assets with respect to consumer protection, financial stability, national security, and economic competitiveness, for example. Due to the rapid growth of the space and President Biden’s Executive Order on Digital Assets, there is quite a lot of work taking place amongst policymakers in Washington, D.C. I do think the industry will continue to undergo rapid change. I am particularly interested in the potential use of digital assets to increase financial inclusion. For example, blockchain technology is being applied to health care, education, real estate, and clean energy efforts. At the Stevens Center for Innovation in Finance at Wharton, and through our Cypher Blockchain Accelerator, we have a direct perspective on the diverse applications of this technology across many industries. It is estimated that over $40 billion of value was lost.īlockchain technology, which powers cryptocurrency, and digital assets will continue to be important over the long run. Also, those involved with the Luna Foundation Guard lost money. There are very serious concerns about consumer protection for those investors. Certainly, investors in Terra and other cryptocurrencies lost money. Therefore, as the price of stocks falls, cryptocurrency has been falling as well.Īnalysts are still unpacking this question. Third, if Bitcoin is considered a risk asset, rather than store of value, then it may experience high correlation with other risk assets. Second, some assert that Bitcoin is associated with tech stocks, since many tech stocks (such as PayPal or CashApp) utilize Bitcoin. This concentration could result in price volatility. First, a large amount of Bitcoin (more than 90%, by some accounts) is concentrated among the same small group of holders. There could be several explanations for this. Data by Arcane Research showed the 90-day correlation between Bitcoin and the S&P 500 reached an all-time high in March. Second, Bitcoin and other cryptocurrencies have been found to be correlated to other risk assets, such as stocks. This had direct downward pressure on the price of Bitcoin. First, when the Terra peg broke, Luna Foundation Guard traded 52,189 bitcoins in an effort to support the peg. There are at least two important points here. There are different theories about what happened with UST last week, but essentially, UST dipped below $1, and neither the Terra protocol algorithm (which maintains the mathematical relationship with Luna) nor lending out of the Luna Foundation Guard (an organization that supports Terra) could bring the value of UST back to $1. Rather, it was backed by an on-blockchain algorithm that facilitates changes in supply and demand between the stablecoin and a cryptocurrency that was created to help maintain the stablecoin peg, called a ‘native token.’ In this case, the native token of Terra was called Luna. UST is an algorithmic stablecoin, which means it was not backed by U.S.
Reserve-backed stablecoins maintain reserve assets, such as cash, T-bills, or commercial paper.Īt the center of the past weeks’ crypto crash was UST. USDC is managed by a consortium that was founded by a company called Circle, based in Boston. For example, USDC is one reserve-backed stablecoin, pegged one to one with $1. Reserve-backed stablecoins offer one-to-one redemption for the U.S. There are many types of stablecoins, including reserve-backed stablecoins and algorithmic stablecoins. Stablecoins are a cryptocurrency whose value purports to be pegged to an asset considered to be stable, such as the U.S. In order to answer this question, it’s important to first understand what a stablecoin is. What happened with the crypto market and how long can this volitilty last?
0 kommentar(er)
