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Key Takeaways
- Christine Lagarde, ECB president warns against cryptocurrencies.
- The cryptocurrency market continues to blossom regardless of skeptical views.
- Long-term sentiments remain bullish.
Amidst the massive growth and adoption that cryptocurrencies have seen this year, there are still skeptics who consider the asset class to be lacking in certain areas.
Joining some other central bankers including the Swiss and Mexican central banks, President of the European Central Bank (ECB) Christine Lagarde has warned that cryptocurrencies should be treated with caution.
While speaking to Bloomberg’s David Rubenstein on a podcast last week, she asserted that cryptocurrencies pass themselves as currencies but in reality were just speculative assets. She goes on to describe the crypto-industry as highly suspicious.
“I think we have to distinguish between cryptos that are those highly speculative, suspicious occasionally, and high intensity in terms of energy consumption assets, but they’re not a currency,” said Lagarde. “Cryptos are not currencies, full stop. Cryptos are highly speculative assets that claim their fame as currency, possibly, but they’re not. They are not.”
Despite the multiple warnings against cryptocurrencies by regulators and central bankers, it would appear that investors are still taking their chances in the market with the asset class. A look at some of the top ten cryptocurrencies’ performances buttresses this point clearly.
Bitcoin, the largest cryptocurrency by market cap as well as the flagship cryptocurrency, is up 64.2% year to date. This year has also seen Bitcoin reach an all-time high of around $65,000 in April. Although it dropped over 50% of its value shortly after following the crackdown on Bitcoin miners in China and Elon Musk’s announcement that his company was cutting ties with the cryptocurrency, for the time being, Bitcoin has been recovering from the market-moving events. Bitcoin is up around 24% in the last 3 months and is currently trading at around $43,765.
Similarly, the second-largest cryptocurrency by market cap Ethereum has seen massive growth and adoption this year by both institutional investors as well as retail investors. The blockchain infrastructure network is up 356.9% year to date. This year has also seen the massive growth of DeFi and NFTs on the Ethereum blockchain with the former reaching a total value locked (TVL) of around $130.07 billion.
Another unlikely candidate that has surged recently has been Ripple’s XRP. Despite the ongoing legal battle deterring some exchanges from listing the asset, XRP is up 282.8% year to date. Market observers expect that it will perform even better should the company win its case with the SEC. The outcome is also being closely monitored by other platforms as its outcome will be decisive for the entire industry.
In like manner, Solana and Dogecoin have also been impressive. Solana currently has the 5th highest ranking in TVL on its DeFi platforms having reached $4.3 billion this month. The relatively young blockchain has shocked the market with its 10,552.2% surge year to date. A large part of this surge was after NFTs launched on the platform a few months back. It set a new all-time high of $213 this month but is currently trading at around $140.
Overall, the entire market keeps pressing on. The cryptocurrency market currently has a combined market valuation of over $1.9 trillion and looks bound to even go higher. The market sentiment is also long-term bullish as there is consensus that the asset class is game-changing in so many ways.