After The Fall In Crypto Prices
Raghuram Govind Rajan (b. February 3, 1963), the former Governor of Reserve Bank of India (RBI), has warned against investing in cryptocurrency, during the World Economic Forum’s (WEF) annual meeting in Davos, Switzerland. Speaking at the World Economic Forum in the third week of January 2023, he recalled the rate at which crypto prices fell across the globe in the past one year, saying that investors would come to know about its real price in coming days. The former Governor of the Central Bank of the South Asian nation advised investors to make a final decision about this new blockchain technology and investment in cryptocurrency only after understanding the rate.
It may be noted that Rajan has repeatedly warned people about investing in cryptocurrency. Even Shaktikanta Das, the current Governor of the RBI, has warned investors. In Davos, Rajan said: “Crypto as a speculative asset class has had its comeuppance. But that doesn’t mean the technology that underlies crypto deserves punishment, as well, and regulators should be wary of innovation-stunting bans.” He stressed: “I don’t think you want to rule out this technology and say it has failed as a speculative asset. I think it’s had its comeuppance. But I think as a technology, I don’t think we’ve seen the limits of it.”
Rajan further said: “The idea that somehow cryptos are going to maintain value, while the fiat currencies collapse. That’s nonsense. Fiat currencies have won out in terms of which is more credible.“
It should be noted that the global crypto market shrank by USD 1.4 trillion in 2022, with Bitcoin losing 60% of its value. Although it recorded a 26% gain in January 2023, breaking back above the USD 20,000 level; the crypto market still remains volatile. Meanwhile, news of crypto fraud, worth millions, surfaced in India in the third week of January 2023.
According to experts, the collapse and bankruptcy of the US cryptocurrency exchange, FTX, in November 2022 triggered an uncertainty in the crypto market. FTX, which was valued at USD 32 billion a year ago, filed for bankruptcy protection in November, and the US prosecutors accused its founder Bankman-Fried of orchestrating an epic fraud that might have cost investors, customers and lenders billions of dollars. Commenting on this issue, Rajan stated that the US Federal Reserve might continue raising interest rates for now, apart from looking for signs of any slack in the labour market. “When you still have 200,000 jobs (being created) a month, it suggests that there’s still a way to go,” added the former RBI Governor.
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