Trapped in deadly hazard over bitcoin safe heaven

The “funny” crypto business follows absurd laws and rules

Photo: EPA

The Covid-19 pandemic has changed life as we knew it. It has changed values, economies, freedom, etc. Almost all industries suffered from the severe slowdown, caused by the pandemic. Almost, but not all. Sectors linked to the crypto industry enjoyed robust growth. Of course, the crypto economy always means crypto currency.

Last year, the Bank for International Settlements issued a report and survey indicating that 80% of the world’s central banks are working on some form of digital currency. Bitcoin has been proposed as a safe haven for traditional assets for many reasons, including independence from monetary policy, a role as a store of value and limited correlation with traditional assets.

Since many jobs had to be done remotely during the pandemic, we have become used to the idea and this practice will probably continue once it is over. For instance, there are robots doing remote surgery and many other things which would have seemed impossible before. This trend will most likely continue once Covid-19 is just a bad memory.

This will be the case, sooner rather than later. With many vaccines coming out as viable candidates and even pharmaceuticals that help people with the virus heal faster, we will be out of the woods in the not so distant future. Once it does, will life get back to normal?

A lot of things came together during the pandemic that helped bitcoin and cryptocurrency in general out quite a bit. One was that the uncertainty of the stock market drove a lot of people to buy bitcoin to store their money while they waited to see what would happen. Many weren’t doing it as an investment, but the value rose so much that they made a tidy profit from doing so. And this made a lot of people bullish on the currency.

Bitcoin has meant easy money for some but also brought bitter losses to others. The crypto cash has been notoriously known for its volatility. The latter might have been a good source of profits if one knew the laws and principles of the crypto market. But does anybody know them? Well, the easy answer is yes. There are people familiar with the matter. The following may sound absolutely absurd, but it appeared to be true.

Bitcoin surged to absolute record highs in the middle of pandemic and then plunged to the ground and here is the reason why.

Maren Altman, bitcoin investor and astrologer has predicted it all. The New Yorker has been following the movements of celestial objects to predict bitcoin price fluctuations since last summer. And while many people might mock her methods, she has built up a 1 million-strong social-media following on TikTok.

And so the 22-year-old told her followers to watch for a price correction on 11 Jan. 2021. And the reason was that Saturn was going to cross Mercury?!? Hold your horses its not another fake news but data confirmed by serious news agencies.

Bitcoin fell as much as 21% on that day, before recovering most of its losses, slamming the brakes on a meteoric rally that saw it double from early December to a record $42,000 in early January.

It would have been funny, if it was not actually bizarre. Assets valued at some billions and billions of dollars were brutally devalued in a single day because of Mercury and Mars.

European Central Bank President Christine Lagarde called for global regulation of Bitcoin, saying the digital currency had been used for money laundering activities in some instances and that any loopholes needed to be closed.

Bitcoin has come out of its niche in recent years and is now bought by ordinary people, investment funds and even large corporations. Some have even taken out loans to buy more of the cryptocurrency.

But its largely anonymous nature has raised concerns that it could be used for money laundering and other illegal activities. “Bitcoin is a highly speculative asset, which has conducted some funny business and some interesting and totally reprehensible money laundering activity,” Lagarde said in an interview at the Reuters Next conference. Lagarde did not provide specific examples of money laundering cases but said she understood there had been criminal investigations into illegal activity. She did not elaborate.

The cryptocurrency sector is still mostly lightly overseen or unregulated, although global standards on areas such as anti-money laundering have emerged. “There has to be regulation. This has to be applied and agreed upon ... at a global level because if there is an escape that escape will be used,” Lagarde said. The Financial Conduct Authority (FCA) has issued a stark warning to investors in so-called cryptoassets. The financial watchdog said investors should be "prepared to lose all their money" should their investment's value collapse. Many cryptoassets are not covered by investment regulation or protection. The warning is the latest in a string from the FCA and comes as Bitcoin, the best-known crypto currency, hits record highs. Some firms are drumming up new business by promising high returns for the investment. Earlier in January, the price of Bitcoin, which has been in existence for 12 years, soared to over $40,000. Its eye-catching swings in price have drawn in scores of investors.

The FCA is concerned that while the highs are attractive, the inherent volatility of Bitcoin, and its rivals, mean there is a high risk of losses. It also means they can be difficult to understand and convert back to cash, and, unlike other forms of investment, such products have no associated tangible asset value. The FCA warns cryptoasset investors they will not have access to the Financial Services Compensation Scheme or the Financial Ombudsman Service as they would if they invested in standard products, such as shares.

It said in a statement: "Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors' money. "If consumers invest in these types of product, they should be prepared to lose all their money."

It said consumers should be wary if they're contacted out of the blue, pressured to invest quickly or promised returns that sound too good to be true and advises potential investors to visit its ScamSmart pages for more information on how to protect against fraud.

Unfortunately Bitcoin and other cryptoassets are subject to dramatic price falls as well as rises. Consumers should be on high alert for unsolicited communications linked to Bitcoin or other cryptocurrencies and should consider any marketing material with an extremely critical eye.

As China moves toward nationwide adaptation of the digital yuan, it is likely to undercut demand for bitcoin and other independent cryptocurrencies. Next year may see similar experiments in other countries

Bitcoin seems so flighty, some might argue you may as well consult a crystal ball, read the runes or stare at the stars to divine the direction of the capricious cryptocurrency.

However and without being involved in such business I may try to put forward a prediction based on funny arguments and so I see some favourable indicators at the end of the month and especially February and early March. Why?? Well, bitcoin’s astrology charts are based on the date for the coin’s genesis block, the equivalent of its birthday. So cheers forth the celebration as it would be followed by a breakdown sometime in early April. On the other hand the predictions may be totally wrong – I never got where will Saturn stay those days and what about Mars and Venus?

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