Canadian central bank i.e. The Bank of Canada (BOC), after the crypto market crash, named the digital asset industry as an “emerging vulnerability”. The Bank said further that crypto’s flagrantly evident “volatility” will serious affect the national economy and domestic financial system.
Under the auspices of Tiff Maclem, BOC’s Governor, the analysts of the bank have assessed financial risks in an annual report. The analysts of BOC termed the digital industry as a growing concern in its annual report. Within this report, BOC also pointed out risks and dangers associated with an advanced forms of crypto i.e. stablecoins and decentralized finance (DeFi).
The bank noticed that although it is argued that stablecoins are less volatile yet they can pose potential risks. BOC argued that if stablecoins are used by the majority then the monetary mechanisms of a central bank can be disrupted greatly. However, the danger can be minimized if stablecoins are pegged with the respective native currency of a particular state. But pegging a stablecoin with multiple national currencies will seriously affect the global monetary policies and mechanisms, suggested BOC.
But even after the current crypto disruption, the Canadian crypto community is hopeful that the disruption is only temporary. They could be right because there was an immediate rebound and Bitcoin retrieved 40% of the value lost in the dip.
Although the crash had occurred throughout the crypto economy, yet the heavy loss succumbed by Bitcoin. Before the massive dip, Bitcoin was trading hands against US$ 60,000 roughly. But later on, the dip brought the value down to US$ 40,000. Bitcoin’s value than further plummet when the news of China banning crypto in the country made highlights. At that time the value went further down under US$ 30,000. However, as of today’s exchange rate, Bitcoin is trading hands at US$ 41,146, with an apparent negative trend.
It all started when Tesla Inc. announced its disconnection with Bitcoin which was otherwise accepted against purchases. The rationale behind Tesla’s decision was told to be in the best interest of the environment. For the past couple of days, Bitcoin was being criticized over its mining process which evidently involved the production of a huge amount of carbon. Since carbon is one of the major causes of environmental pollution, Tesla and its CEO were heavily criticized for supporting Bitcoin.
But still, Tesla is keeping intact its Bitcoin holding and similarly, Elon Musk too hasn’t disposed of any of his Bitcoins. In the meanwhile, Microstrategy came in aid of the leading coin and invested further US$ 10 Million.
While the crypto market remains to be disrupted but people are of the view that the crypto rally hasn’t lasted. In fact, they are suggesting that the crypto economy is undergoing a correction and after that prices will surge immensely.
