There is currently a declining trend in crypto currency, in the last one week, many other crypto currencies including bitcoin had seen a decline of more than 10 percent.
Investment in crypto increased in Asia
Some time ago, the IMF has also stamped the fears raised by the Reserve Bank in the Financial Stability Report. The IMF has expressed concern over the growing investment in crypto in Asia, especially in countries like India and Taiwan, and has said that steps can be taken so that the interests of investors can be protected. An IMF blog has warned that crypto assets can pose a threat to financial stability. The same thing was said by the Reserve Bank in its stability report as well. In this blog, there has also been talk of increasing investment in India in Asian countries.
What is special in the blog
The report said that financial inclusion has increased due to the digitization of payments. At the same time, the increasing trend of crypto has also become a threat to the entire system. The IMF’s blog states that the use of cryptocurrencies has increased rapidly from India to Vietnam and Thailand and may reach the point of impacting the regional financial system. The blog said that prior to the pandemic, crypto and financial systems of countries were isolated from each other and had no direct connection with the equity markets of Asia. Because of which there was no reason to think that crypto would affect financial stability.
However, during the lockdown, people resorted to digital routes for additional income and there was a sharp jump in crypto investment. During this period, lower interest rates and easily available loans also registered an increase in it. The crypto business grew 20 times in just one year. However, with central banks raising rates, the situation changed rapidly, causing significant losses to crypto investors, causing them to revise their portfolios, which ranged from a collapse in the markets to defaults in traditional liabilities.
According to the blog, as the adoption of crypto in Asian countries has increased, the relationship between regional equity markets and crypto assets has become more clear. After 2020, there is a steady increase in this effect. This has created fears that the shock of one market may now reach another market, so countries now need to create a framework for crypto to protect the interests of investors.
Losses in crypto increased
There is a sharp loss in crypto currency. In the last one week, many cryptocurrencies including bitcoin have seen a loss of more than 10 percent. At the same time, recently, bitcoin had fallen more than 7 percent in a single day. In such a situation, there is a sharp volatility in bitcoin and many investors are facing high losses. In view of this, the IMF has advocated the creation of a framework.