The CEO and founder of Domain Money, Adam Dell, argued on Tuesday that regulation is an important step in the maturation of the criptocurrency industry. Dell provided a preview of the Cavuto: Coast to Coast Tuesday afternoon as it traded lower around the $20,000 level, down from its all-time high of $68,000 reached in November 2021. On Tuesday, it was trading lower, at around $1,174.
The leading criptocurrency has taken a beating in the year 2022, continuing a decline that started in November last year. For most of the year, the value remained within the reach of $40,000, but two large drops one at the beginning of May and one earlier this month brought the currency to less than one-third of that November high.
The currency jumped to new highs in 2021 with a dip of around $30,000 a month during which time it was worth around $30,000 before hitting its all-time highest value.
The central bank is trying to combat soaring inflation, which is at a high not seen since the beginning of the four decades, and has had some rough weeks in anticipation of and following rate hikes by the Federal Reserve.
The Fed will take aggressive action to try and control inflation, which has reduced investor appetite to hold assets perceived as higher risk, according to the expectation.
The tighter monetary policy has impacted both stocks and cryptocurrencies over the past year.
Cameron and Tyler Winklevoss warned that the industry is entering a winter of a contraction that settles into a period of stasis, according to gemini founders Cameron and Tyler Winklevoss. The exchange recently cut its staff by 10%, citing turbulent market conditions that are likely to persist for some time. The decoupling of the TerraUSD, a stable coin that was tied to $1 last month added to the worry of more volatility in the market. The world's largest stable coin by market cap, tether, was briefly sluggish from its $1 peg.
Stable coin is a digital currency with values that are tied to traditional assets, like the dollar, another currency or gold. Its correspondence with the dollar is what makes it stable in theory. The volatility in the market challenged that presumption.
The drop in the market for cryptocurrencies highlighted the need for more federal regulation to respond to the wave of investment in the currency whose secrecy is a major part of its attraction, according to U.S. Treasury Secretary Janet Yellen, who told a House committee last month.
A top official at the SEC indicated last month that tighter rules around stable coin could be closer to the end of the month.
It is important that this industry mature and regulation is an important step in that maturation, as Dell stressed on Tuesday that there are a number of platforms out there that are engaged in activity that are highly speculative, and the underlying investor isn't familiar with those risks, and that is a dangerous combination. He said that it is important for investors to appreciate the risks associated with this asset class. At Domain Money, where we offer portfolios for both stocks and cryptocurrencies, we encourage our investors to think clearly about the speculative nature of this particular asset class - and while the returns can be spectacular, there is a risk associated with it, according to Dell.