According to Reuters, Sir Jon Cunliffe, the deputy governor for financial stability at the Bank of England has asked cryptocurrency investors to brace themselves for the shocks of upcoming monetary policy tightening by the Federal Reserve and other central banks globally.
He was at a Wall Street Journal conference, where he also talked about rising interest rates, their deadweight loss and its effect on cryptocurrencies. As per Federal Reserve Chairman Jay Powell, the Fed will continue to tighten monetary policy until it sees “clear and convincing” proof of inflation falling to its desired target rate of 2%.
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. When there’s a move out of risky assets, you would expect the most speculative assets to be the ones most affected.
The deputy governor said back in November that the threat of cryptocurrencies to the financial stability of England was getting closer. Then again in the next month, he was seen publicly saying that the price of cryptocurrencies can “theoretically or practically drop to zero.”