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Cryptocurrency Expert Warns Over Volatility of Digital Assets

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Cryptocurrency Expert Warns Over Volatility of Digital Assets

A local cryptocurrency operator has recommended suspending investment in digital assets because the global market faces intense volatility in the near future due to interest rate hikes and monetary policy tightening.

Cryptocurrency exchange operator, Mr. Satang Corporation’s founder Poramin Insom, said three factors are determining the cryptocurrency market’s future: interest rate hikes, inflation rates, and US employment numbers.

Market sentiment has been depressed by all three factors as the Federal Reserve is expected to raise interest rates by 0.5 percentage points at least twice this year, both in June and July, as well as reduce its monthly asset purchases in the next three to four months to curb soaring inflation.

The US monthly new jobs figures excluding the agricultural sector or non-farm payroll have consistently been above 200,000 a month this year, indicating the Fed is likely to implement faster rate hikes because the numbers suggest the US economy is robust enough to withstand the blow caused by a slowdown in asset markets, said Mr. Poramin.

After the collapse of TerraUSD and Luna, the value of the global cryptocurrency market plunged to US$1.2 trillion from a peak of $2.9 trillion in November 2021.

According to CoinMarketCap, the total stablecoin trading volume as of May 26 was $69.2 billion, which is 87.4% of all cryptocurrency trading volume.

In the face of intense volatility, stablecoins are being used by investors as an alternative form of storing funds.

Read: Do You Pay Taxes On Bitcoin Cryptocurrency Profits?

According to Mr. Poramin, stablecoins such as USDC, USDT, and BUSD are considered safe-haven assets since their prices are relatively more stable than other digital coins such as Bitcoins and the weakening baht.

Additionally, gold stablecoins such as PAX GOLD (PAXG) are seeing investment since spot gold prices are expected to rise up to $1,850 an ounce.

According to him, gold could reach $1,900-1,925 an ounce or even $2,000 due to high inflation worldwide.

The Fed is likely to raise interest rates until the inflation rate is under control, so it is hard to determine when the cryptocurrency market will recover, Poramin said.

For the next few months, investors should hold off on buying digital assets, he said, as the market is expected to continue on a downward trend.

Mr. Poramin emphasized that the market will remain volatile and prices will fluctuate, so investors must be very careful when making trading decisions.

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