By Bitcoin.com - 1 month ago - Reading Time: 2 minutes
Bank of England’s Cunliffe Warns Crypto Will See Tough Times as Federal Reserve Tightens Financial Conditions
Bank of England’s deputy governor for financial stability, Sir Jon Cunliffe, has warned of hard times ahead for cryptocurrency investors as the Federal Reserve and other central banks tighten monetary policy.
Bank of England’s Executive Warns About Crypto
Sir Jon Cunliffe, deputy governor for financial stability at the Bank of England (BOE), had a warning for crypto investors at a Wall Street Journal conference Tuesday, Reuters reported.
The Bank of England executive cautioned that crypto investors should expect more difficult times ahead. He explained that as the Federal Reserve and central banks around the world tighten financial conditions, investors will be more attracted to safer assets.
Replying to a question about whether rising interest rates would ramp up pressure on cryptocurrencies, Cunliffe was quoted as saying:
Yes, I think as this process continues, as (quantitative tightening) starts in the U.S. … I think we’ll see a move out of risky assets.
Federal Reserve Chairman Jay Powell said last week that the Fed will continue tightening monetary policy until it sees “clear and convincing” evidence that inflation is falling to the target rate of 2%.
Cunliffe also discussed another factor affecting the crypto market. Noting the Russia-Ukraine war is prompting investors to move funds into safer assets, he advised:
When there’s a move out of risky assets, you would expect the most speculative assets to be the ones most affected.
In November last year, Cunliffe said that cryptocurrency’s threat to the stability of the British financial system was “getting closer,” urging regulators to take action.
In December, he said that the value of cryptocurrencies could fall sharply, stating: “Their price can vary quite considerably and they could theoretically or practically drop to zero.”
What do you think about Sir Jon Cunliffe’s comments? Let us know in the comments section below.
Original source: Bitcoin.com