Despite the current rebound, the IMF expects a further drop in the price of cryptocurrencies

In an interview with Yahoo Finance, the institute’s director of money and capital markets, he is pessimistic about the future of the market.

While the cryptocurrency market is experiencing a period of calm with a rebound of the two main cryptocurrencies bitcoin and ether, the International Monetary Fund (IMF) is more pessimistic.

After the last two crypto-crashes in May and June, which caused bitcoin and ether to lose more than 60% of their value from their all-time highs, the organization expects further drops.

“We could see further collapses, both in cryptocurrencies and in markets for risky assets, such as stocks,” Tobias Adrian, director of money and capital markets at the IMF, said in an interview with YahooFinance. “There may be further failures of some tokens, particularly some of the algorithmic stablecoins that have been hit hardest and there are others that may fail.”

Recall that in recent months many so-called algorithmic stablecoins have been weakened, the main one being the Terra Luna Terra usd (ust) blockchain stablecoin, which collapsed in mid-May.

The IMF member also refers to classic stablecoins, which are not immune from further fragility in the future. It specifically refers to the company Tether and its USDT stablecoin.

Some stablecoins “are backed by somewhat risky assets … The fact that some stablecoins are not fully backed by money-like assets is certainly a vulnerability,” he said.

Recall that a stablecoin (or stable cryptocurrency) is a crypto-asset (or a digital asset) pegged to a fiduciary currency such as the euro or the dollar. A stablecoin can also be backed by other assets (such as gold). This is called the underlying of the stablecoin.

Faced with the anticipation of these new market upheavals, Tobias Adrian calls for regulation of cryptocurrencies, in the same way as other institutions, notably the European Central Bank (ECB).

“There are 40,000 cryptocurrencies on the market,” estimated Tobias Adrian. “Regulating the cryptocurrencies themselves will be difficult, but regulating entry points such as exchanges and wallet providers […]it is something very concrete and very feasible “.

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