Internal Monetary Fund (IMF) released a blog detailing the concerns that the crypto market might have in the future of the stock market. In the detailed post, they talked about the fact that both the crypto market and the stock market are trading in sync.
Before the pandemic, this wasn’t an issue as the crypto market was seen as a hedge whenever there was a societal risk in the local currency or investors need an alternative asset to store cash in.
Since cryptocurrency is slowly becoming a main staple of society, caution should still be taken if and when you decide to travel in these uncertain territories. Since the trading charts between stocks and crypto are starting to look oddly similar.
IMF is stating that if there were to come a time when the crypto market collapses or something happens, it will bleed into the stock market and destabilize financial markets.
Thus, there needs to be an international regulatory framework that can prevent this from happening and protect investors.
Writer’s Take
At the moment the crypto market does indeed need to be regulated. The rabbit has already gotten out of the hat and there is no going back.
Digital currencies are the future and as more investors enter the market, there needs to be a framework that protects investors and the wider financial society.
The volatility of the crypto market driven by speculators is much different from the traditional movements of the stock market.
It’s akin to tech stocks but on steroids. It will be a challenge to regulate this market given the fact that the industry is moving quickly and new applications and features are being launched all around the world. This will be a difficult task but is necessary.
