Crypto Winter Is Coming
In the popular TV series Game of Thrones, the motto of House Stark was "Winter is coming". This is meant to be a warning and to be constantly vigilant. As they are one of the great Kingdoms of the north, the winter would hit them particularly hard.
In the crypto space, with the wild swings in the market, we could say that any market shocks could hit the crypto markets very hard too. But what shocks could cause such a reaction?
Regulatory Risk
The main risk that could cause a coming crypto winter is some regulation from the EU and US. With the speed at which financial sanctions are being imposed on Russia to de-westernise them, the speed at which any crypto regulation would come could be very fast.
The EU has said they will not ban Bitcoin yet but the Biden Administration has said they want to regulate Crypto. What could this mean going forward?
The recent report from Biden lays out some of their points. It looks like they want to regulate the larger exchanges and implement CBDCs for cross-border payments. If there is any ban on private crypto or large scale restrictions in the US or EU, this could be the only cause of a crypto winter.
Jon Snow was really a southerner from London
The CBDCs won't be able to compete with any private crypto in reality, but the Elite have ways in which they will try to force their usage, such as regulation/tender laws the same as with fiat. The importance and control of the central banks are looking very fragile and they don't like that.
It could be that there will be some regulation of the large centralised exchanges to force compliance with the initial 2 layers of CBDCs that could be implemented. Once the 2 layers of CBDCs are in circulation, they would ideally like to do a rug pull on the 2nd layer and the total control through CBDCs will be the only cryptos allowed.
However, any crypto winter would be shirt lived in my opinion, with the fast developing Defi sector, and the multitude of on-chain protocols, there will be private crypto that will retain its value and become the de-facto money of the future.
Therefore, there is no need to fear any crypto winter, Defi is like the ice wall at castle black and will protect us like it does now.
Thanks for reading!
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