“Has the optimism for cryptocurrencies faded?”


Asks Vinay Sharma, Senior Trader at ayondo markets:

“The buzz around cryptocurrencies seems to be dissipating, with Bitcoin, the flagship for crypto’s currently trading at around $9000, which is 55% off its high levels seen last December. The question of their use and viability as a currency still remains.

“In my view, the chances of crypto’s being used as a viable medium of exchange in the future is very slim. The question I always like to ask is: “If I get paid in bitcoins how do I get taxed on it?” But there’s more to it than just taxes. Liquidity is also an issue, the key function you are taught as aspiring finance students is that a Central Bank is a lender of last resort.

“This couldn’t have been truer in 2008 with a deep financial crisis that needed central banks to pump liquidity into the financial system to restore confidence and avert a crash. Bitcoin essentially cuts out the need for a Central Bank, which could leave the financial ecosystem vulnerable to further crashes.

“In my opinion cyrptocurrencies aren’t really currencies at all. With volatility so high they become assets that traders and investors can speculate on and I imagine this will continue to be true in the long term.”