"The key to understanding crypto is that it has no value in any economic sense. It generates no income, commands no productive capacity and pays no dividends. Unlike state money, it is not backed by a tax base or a fiscal authority. What props up its price is not cashflow but expectation: the hope that someone else will validate today's valuation tomorrow. When sentiment turns sour or people pull their money out, there is nothing to break cryptocurrencies' fall. Prices don't correct, they collapse."
"In 2023, MPs rightly said that cryptocurrency trading in the UK should be regulated as a form of gambling a demand rejected by the then Tory government. The volatility of cryptocurrencies is not accidental but structural. The Financial Times reported that investors pulled out of crypto because there was a shunning worldwide of speculative assets amid concerns about sky-high AI valuations and the path of US interest rates."
In barely six weeks more than $1.2tn has evaporated from cryptocurrency market capitalisation, sending bitcoin back to April levels and briefly below $90,000. Cryptocurrencies generate no income, command no productive capacity, pay no dividends, and lack fiscal or tax-base backing. Price is sustained by expectation rather than cashflow, so negative sentiment leads to collapses rather than corrections. MPs argued in 2023 that crypto trading should be treated as gambling. Volatility is structural, and recent outflows reflected a global shunning of speculative assets amid high AI valuations and US interest rate uncertainty. Britain is especially exposed as many young people, facing stagnant wages and unaffordable housing, borrow to chase one-shot gains.
Read at www.theguardian.com
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