When asked if rising interest rates would put more pressure on cryptocurrencies at a conference hosted by the Wall Street Journal on Tuesday, May 17, Deputy Governor Jon Cunliffe answered:
“Yes, I think as this process continues, as (quantitative tightening) starts in the US … I think we’ll see a move out of risky assets.”
Cunliffe added that the turmoil in Ukraine could cause more people to turn to safer assets. Last month, the Bank of England requested a 9% fee increase from City of London firms to investigate crypto risks.
However, Vinay Nair, CEO of investment search engine Magnifi, recently stated that his company is seeing an increase in interest from investors looking for opportunities in the cryptocurrency markets despite the recent drop.
Nair noted that investors and advisors are looking for opportunities to participate in Bitcoin-related funds, despite the asset’s struggles to maintain its position above the $30,000 threshold.
Since hitting a record high in November of $69,000, the value of the most popular cryptocurrency, Bitcoin, has fallen to a low point of $25,401 last week, its lowest level since December 2020.
Time for Global Crypto Regulation
On Tuesday, Director of the French Central Bank, Francois Villeroy de Galhau, stated that the topic of crypto-asset regulation is expected to be discussed during a meeting of the Group of Seven finance chiefs taking place this week in Germany.
Villeroy made the following statement about the current volatility in crypto-asset markets at a symposium on emerging markets in Paris:
“What happened in the recent past is a wake-up call for the urgent need for global regulation.”
He added:
“Europe paved the way with MICA (regulatory framework for crypto-assets), we will probably … discuss these issues among many others at the G7 meeting in Germany this week.”
It appears like the entire market correction is a subset of the significant retreat from risky assets caused by rising interest rates, inflation, and ongoing economic uncertainty.
