All eyes are on Bitcoin (BTC), with the most important cryptocurrency shooting up past $40,000 on Monday. Unsurprisingly, the value enhance occurred shortly after Tesla CEO Elon Musk tweeted that the electric-car firm would potentially accept BTC payments as soon as extra miners affirm inexperienced vitality initiatives.
But, whereas Musk’s tweet could have pushed the value of Bitcoin up, some trade consultants consider that Bitcoin shouldn’t be a cryptocurrency that ought to be leveraged. For instance, throughout an unique interview with Cointelegraph at Bitcoin 2021 in Miami, Caitlin Long, founder and CEO of Avanti Monetary, mentioned that not like different cryptocurrencies, solvency issues greater than leverage and liquidity relating to Bitcoin:
“When you get into Bitcoin and also you begin dropping cash, I take into account that to be actually invaluable tuition for actually studying what Bitcoin is. We have got lots of new individuals on this trade now who’re going by these classes, and hopefully, of us will study from them. Particularly on this bull market, there’s been a lot leverage added to the system. For these of us who’ve been round a very long time, we’ve discovered these classes a very long time in the past — you do not leverage Bitcoin.”
A regulatory push for Bitcoin and stablecoins
Along with advising that Bitcoin shouldn’t be leveraged, Lengthy talked about that there are new laws for Bitcoin popping out of Washington, DC — one thing she believes has been coordinated with different authorities our bodies. “It was Ray Dalio who mentioned that Bitcoin’s greatest risk is success — as a result of meaning the regulators are going to be cracking down,” mentioned Lengthy.
Though this can be, Lengthy identified that laws won’t ban Bitcoin or different cryptocurrencies, so long as customers comply. She mentioned:
“The punchline is that when you pay your taxes and also you get regulated, and you do not take shortcuts, you are going to be okay. These which might be making an attempt to commit crimes, or defraud customers, or not pay taxes and never adjust to the regulation, then these individuals are not going to be okay.”
Lengthy additionally famous that laws round stablecoins are a precedence for lawmakers. Particularly, it will make sure that stablecoins don’t infect the U.S. greenback fee system with liquidity threat. To place this into perspective, Lengthy talked about the unintended hard fork that happened for a few hours on Ethereum throughout November 2020, saying:
“On the time, I used to be pondering, ‘What would occur if all of the Ethereum ERC-20 stablecoins needed to be redeemed inside the span of minutes as a result of they needed to be burned on one fork and reissued on one other?’ That’s not a threat that the normal monetary system has been fascinated by.”
Furthermore, Lengthy commented on the dangers related to stablecoins again in Might, warning that the complete stablecoin market has the potential to bring down other tokens upon a credit score market correction.