The Cryptocurrency Crash of 2022: Which Lessons for the Future?

Roberto Moro-Visconti () and Andrea Cesaretti
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Roberto Moro-Visconti: Catholic University of the Sacred Heart

Chapter Chapter 12 in Digital Token Valuation, 2023, pp 395-410 from Springer

Abstract: Abstract Cryptocurrency crashes can be triggered by various factors, including speculatory bubbles, security breaches, market manipulation, and regulatory actions. The world’s major cryptocurrency defaults occurred in the field of cryptocurrencies and, most importantly, cryptocurrency exchanges. Another reason for their volatility is that most cryptocurrencies are related to exchanges where the prices depend on arbitrageurs and speculators who trade across them. The further cause of cryptocurrency variability is the concentration of ownership. Another risk indicator is the promise of other returns in the short term which is one of the pillars of Ponzi schemes. Investors often prefer to trust rumors about other people who have become millionaires overnight, but it is possible and necessary to conduct due diligence on the DeFi projects according to the classical schemes. The price of cryptocurrencies is influenced also by the trend of interest rates such as the stock market index, albeit with the variability of different amplitudes which means that it is used as a financial investment instrument.

Keywords: Cryptocurrencies; CryptoExchanges; Volatility; Ownership concentration; Interest rates (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-42971-2_12

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DOI: 10.1007/978-3-031-42971-2_12

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