The loose monetary policy of the central banks is one of the drivers for this year’s upswing in Bitcoin. (Archive image)
The large amount of cheap money inflated the prices on the crypto markets artificially, as the new CEO of Zurich-based Crypto Finance (Brokerage) AG said in an interview with the AWP news agency.
New all-time highs for Bitcoin and other blockchain currencies such as ether kept the markets in suspense. The loose monetary policy of the central banks, in combination with the rising fears of inflation, would certainly have played a central role: “These not only drove the stock markets to new highs, but also other investment alternatives such as Bitcoin,” Heusser sums up the crypto year 2021.
Correlation to the stock market
However, according to Heusser, relying on the fact that the prices of crypto currencies will continue to skyrocket in the face of increasing fears of inflation does not go far enough: “The entire asset class still has a strong correlation to the traditional markets and in particular to the stock market.”
The whole thing should be seen rather ambivalent. If inflation rises steadily and investments with a so-called “positive cash flow” gain in value, this is certainly an advantage for Bitcoin, precisely because of the high correlation to the stock market, explains Heusser.
The other side of the coin, however, is also to be found in the dependence on the traditional financial markets: “Should inflation get out of control, we will experience tumults that could lead to cascades of liquidation even with crypto assets, as we experienced in March 2020 have »warns the expert.
Potential der CBDCs
Looking ahead, Heusser also sees enormous potential for increasing efficiency and reducing costs for financial institutions in national digital currencies, Central Bank Digital Currency or “CBDC” for short. When CBDSs come, banks would have to “dress warmly” to prevent “the neo-banks and Web3 platforms and applications from snatching their business away from them,” he predicts.
Firms invest in NFTs
Heusser sees the next big trend for 2022 in the so-called “Metaverse”: “The whole hype about none-fungible tokens, or NFTs for short, has led to big companies like Nike, Adidas, Coca Cola and sports clubs like FC Barcelona have already thought about investing in the «Metaverse». This could create a whole new economy, ”predicts the crypto expert.