Cryptocurrency and Financial Bubble

Hajon Lee

From last year Cryptocurrencyand the stocks market have been a major keyword and the hot topic worldwide. There have been many people who have become richer than they have ever been, but also, on the other hand, people whose money became just paper waste. So why has ever jumped into the boat of Cryptocurrency without any studying or at least giving it some research into whatever they are investing in?

The answer is quite easy. The answer has two parts to it. First is that money is being copied. This means there is a huge opportunity to make money. At least there was before March in my personal opinion. Cryptocurrency’s values rocket to the sky even up till +200%. That is why everyone, probably the person sitting next to you, is also investing in such coins. The other answer is that there is a huge financial bubble existing from last year. No one knows when it will pop or if it even will pop. The interest rate on U.S. Treasury Bills is rising, but countries are keeping on supplying money in order to keep business alive. This is increasing the inflation at the moment. In a situation where money has been released a lot, such as after the financial crisis or Covid-19 in this case, inflation suddenly rises when money begins to spin as economic vitality has been revived. The stock market numbers do not seem to reflect the reality of the situation and businesses. This is why a lot of people have shifted into Cryptocurrency.  Cryptocurrency has seen a huge downfall in value after President Biden announced he will raise taxes on the rich. The exact announcement stated that: “For those earning $1m or more, the tax on investment income would rise to 39.6%, up from a current rate of 20%, as part of plans expected to be announced next week” (The Guardian). After such, the Korean Chairman of the Financial Services Commission stated that Cryptocurrency is an unacceptable virtual asset. He also announced that all Korean Cryptocurrency exchanges will be closed by September. This made Bitcoin and other coins to all tremble down. Due to such controversial statements, people have been signing a president petition for the Chairman to resign from his position. It is very interesting to see how such virtual currency plays out in the future and if people will be returning back to the stock market.

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