The recent bearishness resulting from the ongoing geopolitical situation has affected the overall market. It resulted in a considerable decrease for market giants and small tokens. As an IMF director has recently warned, the wave of sell-offs has slackened, but it hasn’t ended. The market currently remains bullish as the influx of capital has pumped it. But there is no surety about how long it will continue.
The broader economic mood is darkening as the inflation rates in the US have seen no control. Recession and inflation have posed major risks to the global crypto market, and it continues like this. In a recent statement, an IMF representative said that crypto, especially Bitcoin, doesn’t pose any big threats to the current financial system, which gave the market boost.
Here is a brief overview of Tobias Adrian’s interview and the possible repercussions for the market.
Increasing selling pressure
The previous few weeks have remained turbulent for the market though the selling pressure has decreased considerably. This change has resulted in a situation of uncertainty which affected the investments in the market. The increase in gains for Bitcoin and other coins seems to be a sign of good days coming. But an IMF representative has warned of another recessive trend for the market.
Tobias Adrian, the director of Monetary and Capital Markets in the IMF, has warned of a worsening situation for the global crypto market. He was talking to Yahoo Finance on Wednesday. According to the available details, he has warned of increasing pressure resulting in sell-offs. While token failures might also take place as the result of the ongoing changes in the market.
According to him, the risk isn’t limited to crypto; other risky markets like equities will also be affected. He predicted the fall of more cryptocurrencies, especially stablecoins that have been hit hard. Tobias Adrian believes that the market might see a further drop in value amid the new wave of recession. It has already suffered a loss of more than 75% of the value from ATH due to a recessive trend in the market.
Failure of more coins
The fall of algorithmic stablecoin like Terra UST was one of the biggest shocks to the market. The users hadn’t imagined the fall of a stablecoin, but as it happened, it speeded up the recession in the market. If more stablecoins collapse, it might result in further chaos for the global crypto market. The investors are already weary of the losses in the market, and it will reduce investments to a considerable amount if a further recession takes place.
Adrian has also expected the runs of fiat currency-backed stablecoins. Some other names like Janet Yellen and Federal Reserve representatives have also warned about this happening. He also talked about the vulnerability of Tether (USDT), which is not backed one-to-one. He cited the backing of risky assets as the reason for the vulnerability of crypto.
Even though he has portrayed a risky picture for crypto, Tobias Adrian doesn’t see 2008 like situation in the market. The reason for that recession was the exposure of banks to shadow banks. He also stressed the need for regulations that will protect crypto investors from possible problems to a great extent. The IMF has recently published a detailed report on the performance of cryptocurrencies and their impacts on the current financial system.
IMF’s director, Tobias Adrian, talked about the chance of further sell-offs in the crypto market. He has also warned of the possibility of the collapse of stablecoins resulting from the possible recession. According to him, the main reason for the fall of cryptocurrencies is the backing of unstable assets, which affect digital assets. He sees no chances of a recession like 2008, when the overall financial situation had darkened.