How to stop cryptocurrencies crash?
Virtually all cryptocurrencies have experienced a double-digit dip in their prices this week. The bitcoin's value dropped by 25 percent. Observers are not surprised by this crash of the digital currencies and propose a way to stop the downwards trend.
The hype will soon be over
The crash of the cryptocurrencies has been foreseeable for a long time now, columnist Taha Meli Arvas writes in Daily Sabah:
“Should Bitcoin crash it would be the greatest bubble in the history of bubbles, trailed closely by the 'Dutch Tulip Mania' bubble of the late 17th century. With skyrocketing market caps, these cryptocurrencies have accumulated all of the wrong type of attention. ... The reality is that even if cryptocurrencies do survive, and I do believe that a select few will survive - albeit at much lower levels, the vast majority will be obsolete by the end of the year. Those that do survive, however, will need the blessing of at least one major domestic currency to act as a conduit via which investors will trade their 'coins' for the domestic currency they actually want.”
No chance of success without a fixed rate
Corriere del Ticino argues that cryptocurrencies should be pegged to real currencies, using the example of Tether, which is the only digital currency whose value hasn't gone down:
“The founder of Tether explained from the outset that the exchange rate of a Tether corresponds to that of one dollar. Its price is guaranteed by its own reserves [each Tether is backed by Fiat money]. The principle of cryptocurrencies that have fixed rates is therefore more attractive. Maduro, the Venezuelan president, also wants to introduce a cryptocurrency that is pegged to the price of oil. The crucial factor here is the credibility of the mechanism of pegging the currency to a reference value. The lesson we can learn from the crash is that virtual financial resources that aren't securely backed by recognised currencies or rates are worthless.”