Cryptocurrencies set to continue their fall

Mumbai: The Indian government's decision to tax the profits of crypto assets in a bid to squeeze out the illegitimate holders, seems to be working well.

Money laundering cases against crypto systems are piling up everywhere and are keeping hands full for the country's enforcement agencies. It is also making small investors wary of the cryptos. Estimates range between hundreds of crores to thousands of crores of money laundering. It is difficult to guess the real number. But one can safely assume that the numbers are large. And small investors can only get hurt cohabiting with such 'investors.

So that raises the question: What is the real need for alternate currencies?

Given that vast quantum of leading sovereign currencies has been infused in the world economy over the last 14-15 years, it is possible that large investors foresee steep down sides in their portfolios as the inevitable withdrawal of the infusion is being implemented by central banks everywhere - in a bid to tame inflation! Such investors seek alternate currencies which would not be linked to global currencies and keep their investments in the black. In the past, the universal global choice in that area has always been gold! Gold is expensive but crypto is not.

However, this time around, gold too has rallied but not enough because a lot of the liquidity that would have come to gold went to crypto currencies instead. Crypto offered several conveniences to money launderers that gold could not. But it has now revealed several headaches as well.

Talking to Bizz Buzz, Ashutosh Bishnoi, a market expert, says, "Thanks to volatility and far too much scrutiny of the regulatory agencies, chances are cryptocurrencies will ebb and will falter more as it time goes by. Sovereigns are not about to give up their absolute right to print money. And gold is not about to give up its claim as the only universal currency of human choice for over 10,000 years."

So, it is going to be a bit of a battle of currencies out there. Clearly US dollar (USD) is not likely to release its stranglehold on the world trade, the crypto universe will push hard to keep its obscurity intact and gold will carry on relentlessly hoping countries other than Russia will partonise their currencies again, he added.

Even as you try to manage a tricky balance between three moving boats, he goes on, here is something to chew upon: almost every time in modern world history when sovereign currencies other than gold began to falter, the linking back to gold has inevitably occurred. But unfortunately, not before a major war forced mutual de-recognition of currencies and hence a need for a universal one which is gold! Bloody though it may seem as a prognosis, the war is already upon us.

We'll just have to wait and see if all the sovereign leaders of the free world are as smart as they are decisive!