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The Cryptocurrency Crash of 2022: Which Lessons for the Future?

In: Digital Token Valuation

Author

Listed:
  • Roberto Moro-Visconti

    (Catholic University of the Sacred Heart)

  • Andrea Cesaretti

Abstract

Cryptocurrency crashes can be triggered by various factors, including speculatory bubbles, security breaches, market manipulation, and regulatory actions. The world’s major cryptocurrency defaults occurred in the field of cryptocurrencies and, most importantly, cryptocurrency exchanges. Another reason for their volatility is that most cryptocurrencies are related to exchanges where the prices depend on arbitrageurs and speculators who trade across them. The further cause of cryptocurrency variability is the concentration of ownership. Another risk indicator is the promise of other returns in the short term which is one of the pillars of Ponzi schemes. Investors often prefer to trust rumors about other people who have become millionaires overnight, but it is possible and necessary to conduct due diligence on the DeFi projects according to the classical schemes. The price of cryptocurrencies is influenced also by the trend of interest rates such as the stock market index, albeit with the variability of different amplitudes which means that it is used as a financial investment instrument.

Suggested Citation

  • Roberto Moro-Visconti & Andrea Cesaretti, 2023. "The Cryptocurrency Crash of 2022: Which Lessons for the Future?," Springer Books, in: Digital Token Valuation, chapter 0, pages 395-410, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-42971-2_12
    DOI: 10.1007/978-3-031-42971-2_12
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