Crypto bubble spotted by IMF

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Three regulator officials believe the inflated market valuation of digital assets may be indicated by their massive sell-off caused by the emergence of a new strain of coronavirus. International Monetary Fund experts Tobias Adrian, Dong He and Aditya Narain warned of a possible crypto bubble in the digital asset market and called for coordinated, consistent and comprehensive regulation of cryptocurrencies.

High market valuation of the crypto-assets could point to a crypto bubble

The regulator’s staff noted that the market capitalization of the crypto market of about $2.5 trillion points to the significant economic value of blockchain technology. However, such a high market valuation of crypto-assets could also point to a bubble, experts said. For the sake of argument, they recalled the massive sell-offs following the emergence of the omicron coronavirus strain.

On December 4, the price of bitcoin crashed to $42 thousand for the first time since late September. The asset fell in price by more than 20% within a day. As a result of the sharp drop in quotations, traders lost over $2.5 billion because of the mass liquidation of margin positions. On December 10, bitcoin is trading at $49,000 and the total capitalization of the cryptocurrency market is $2.4 trillion.

Previously, CEO of Galaxy Digital Mike Novogratz said that the price of bitcoin in the current correction will not fall below $40 thousand. According to Novogratz, the level of $42 thousand is the lower level of correctional decline.

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