What Awaits Cryptocurrencies In a Year of Turmoil

Since the start of 2022, cryptocurrencies have been on a rollercoaster ride, with their value in constant flux. Some of the wildest swings in value with cryptocurrencies like Bitcoin have come this year. While the current situation in Europe can be considered one of the reasons cryptos have been on this wild ride, that isn’t the only thing that has made the crypto market feel more like an online casino and less of a safe way to invest your money.

Bitcoin, Dogecoin, Cronos, and Shiba Inu are all down from their highs at the beginning of the year. While most of the fall-off happened in January, Shiba Inu was able to weather things out until the first part of February. Bitcoin has been the most volatile of the four cryptocurrencies named, as they have seen huge swings since the Russian invasion into Ukraine started.

What Affects Will President Biden’s Executive Order on Crypto Do to Crypto Markets

While war has been a factor in some of the movement that’s currently going on in the crypto markets, another thing is coming down the pipeline that could see crypto’s take a hard hit in value. President Joe Biden of the United States has signaled that he is signing an executive order to deal with cryptocurrency. The Biden administration has raised concerns about Russia using cryptocurrencies to get around the economic sanctions placed on them, which is why this executive order is being issued to regulate how crypto is traded in the United States.

While the details of the executive order are unknown at the time of this writing, the one clear thing is that it will be about regulating cryptocurrencies in an attempt to keep anyone in the United States from doing business with Russia or Russian businesses. On the surface, regulations to keep Russia from getting around sanctions with crypto sounds like a good and noble option to deal with the country’s misdeeds of invading Ukraine. However, there could be unintended consequences of any new regulations that do get put in place.

Abuse of Power: What Crypto Enthusiasts Fear From Regulation

People have seen this before from governments with power; they take and use their power to hurt people fighting against their policies. With cryptocurrencies meant to be a decentralized form of payment for people, regulation could affect the decentralized aspect that cryptocurrencies were made for, putting their future and value in danger. If there is a regulation that would only allow people to have crypto if it was recognized as a centralized form of currency, their holding would be worthless in the United States if they didn’t adopt their crypto into a form of centralized currency.

While that part is pure speculation to this point, it doesn’t mean the fear from crypto enthusiasts over these things is there because this could be a reality that we see in the future. Until the details come out, crypto will remain in flux and unsafe for the short term and possibly the long term. There will most likely be panic selling before and after announcing the details of the Biden executive order on cryptocurrencies. Still, it won’t be until after implementing his order that we will truly see its effects on cryptocurrencies.

How Low Can It Go: CBDCs Could Be Another Threat to Cryptocurrencies

Another threat facing the crypto markets soon is the announcement of a Central Bank Digital Currency (CBDC) in the United States. While an announcement isn’t set until May, a digital dollar could affect the crypto market that values its crypto’s worth based on the dollar. While cryptocurrencies have weathered other CBDC announcements in countries like China, which has an outright ban on crypto, and Japan, which has taken a friendly stance with crypto, it will all come down to the United States.

All eyes will be on the May Federal Reserve meeting over a CBDC, which could turn May into the worst month for crypto in all of 2022. If a digital currency is sold to people like it’s another form of cryptocurrency, then digital currencies could take the place of cryptos like Bitcoin or Dogecoin. For people that hold crypto now, keep your eyes closely on two things, the Biden order and the May Federal Reserve announcement on a digital dollar, as these two dates can be volatile for crypto.