The exaggerated trends and the temptation of high returns from cryptocurrencies have fueled the “greed” of investors, especially those lacking investment knowledge, which in turn has been a major factor in the current downward spiral. of the market, said the managing director of Yoshi Markets.
The cryptocurrency market continues to face uncertainty and even its future is clouded at this point, so it is up to investors to be responsible and understand the risks before diving into an investment that may face further turmoil, Arshad Khan said in an interview.
“It’s all down to greed that has come into the market,” Mr Khan said. The National at the Wealth Today Summit in Dubai.
“Some investors believed that digital assets could come with any kind of innovation and they could give very high returns.”
However, the stock market crash also provided a “bit of a cleanup” for the asset class, he said.
“The good thing is that clients should learn a lesson from this, and investors should start to self-inspect themselves as well. You can’t just believe someone who comes to you with promises of high returns – try to think first if it is technically impossible.
Bitcoin, the world’s first and largest cryptocurrency, slumped below the key psychological $20,000 level on Saturday as investors continued to shy away from riskier assets amid fears of rising interest rates. interest as central banks tried to rein in inflation.
The digital token has since pared its losses and was trading at $20,260.72 as of 9:16 p.m. UAE time on Wednesday, CoinMarketCap reported.
However, it is down more than two-thirds from its high of nearly $68,000 last November. The market cap of cryptocurrencies is over $895 billion.
Mr Khan – whose Yoshi Markets are regulated by Abu Dhabi Global Market – highlighted the key role regulators play in helping to shape the cryptocurrency market, especially given its notorious volatility.
What was once touted as an industry that needed no regulation – blockchain, its underlying technology, eliminates the need for a central governing body – now seems to be crying out for governance to curb wild swings in prices, activity illicit growing and the collapse of the platform.
US-based Celsius froze withdrawals and transfers earlier this month, blaming ‘extreme’ market conditions, while Binance, the world’s largest exchange by volume, halted Bitcoin withdrawals on June 13 for a few hours due to what its managing director described as a “blocked transaction”.
The market was also rocked by the dramatic collapse of the Luna cryptocurrency and its associated Terra stablecoin. Luna, which traded at $116 in April, fell to less than 1%, while Terra – which as a stablecoin was supposed to be worth $1 at all times – was de-indexed on May 9 , causing it to crash to 7 cents.
The situation highlighted the important role regulators play in the cryptocurrency world, as they engage with platforms and investors to provide a safe investment environment, Khan said.
“Clients have seen what they can lose if they go to unregulated platforms or go through other moon-promising brokers. In the end, you don’t even get your capital investment back,” did he declare.
“There are still people sitting on the fence, but you have to build that kind of trust. If they see a regulated platform, they will trust it.
Mr Khan also dismissed the notion that the cryptocurrency market is a “scam”.
While he acknowledged that a small number of cases have rattled the industry — malicious platforms suddenly disappearing and running away with people’s investments, for example — he argued that the market’s longevity proves its credibility.
“Some say it’s a scam, a bubble, a Ponzi scheme – bad news travels faster than good. But I’ve never seen such a thing that can last 12 years, if so “, did he declare.
“Look how blockchain is solving problems in the financial sector. If you can truly understand blockchain and appreciate this side of it, you can completely change your perception.
Updated: June 23, 2022, 04:13
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