Impending regulation of cryptocurrencies might ultimately lead to a crash, sooner or later, analyst Charles Gasparino wrote in the New York Post on Saturday.
“Ask Wall Street’s C-suite types about cryptocurrencies, and they all admit they’re getting into them one way or another,” he wrote Saturday. “But keep asking questions, and they’ll tell you something else, too: The market is ripe for a crash.”
The $2 trillion crypto market faces “serious regulation that will quash exuberance over crypto,” according to Gasparino.
“Of course, many true believers in the digital space will scoff at anything traditional Wall Street says,” he added. “The movement was created in the aftermath of the 2008 financial crisis as an alternative to the then-faltering Wall Street banking system.”
Like the early late 1990s-early 2000s Internet boom that bubbled and crashed, crypto faces a market correction, but even Gasparino notes big tech is the ruler again on Wall Street.
“That’s why the smart money believes that, on the one hand, a collapse is coming, and a cold dot.com-like winter is likely to set in for some time,” Gasparino concluded. “But on the other hand, like the rebirth of tech, crypto will come back because distrust in the government and big banks is here to stay.”
Gasparino noted “rumors that crypto-hating Treasury Secretary Janet Yellen was about to go on a holy war against digital currency,” suggesting she “wants a jaw-dropping 80% tax rate for crypto.”
“The trigger for the crypto crash could be Washington, many investors believe,” Gasparino wrote. “For most of its existence, the government allowed crypto to grow largely regulation-free, which helped build the euphoria around its pricing. A likely regulatory burden will knock out at least some of the pricing, but also draw skepticism for the staggering run-up in crypto valuations that we’ve seen this year.
“It’s unclear exactly what the top crypto cops, Yellen and SEC Chairman Gary Gensler, have in mind to rein in the market. Wall Street executives tell me they expect increased enforcement actions on specious claims made by crypto sellers and its use in illegal activities.
“Others say Yellen and Gensler may seek rule-making that creates barriers to entry, which could slow or prevent more mainstream usage of digital currency.
“There is also talk about the government banning crypto altogether for fear that it will become a legitimate alternative currency to the dollar.”
But it is too late for a ban, as a major hedge-fund crypto investor told Gasparino: “The horse has left the barn.”
Source: Newmax
