Banks Cash In on FUD of Crypto Market Crash
A series of harsh sell-offs triggered by Fear, Uncertainty, and Doubt (FUD) resulted in a slight pullback in crypto prices this week, causing coins like Bitcoin to drop 14% while others like Ether fell 12%.
If you are wondering what is FUD in crypto, the acronym of Fear, Uncertainty, and Doubt refers to that tricky point in investor behavior when rumors of bad news tip the market scales and cause selloffs. More often than not, this results in a crash in the market.
In this particular case, stoking FUD pressures was a notice from the Chinese which revealed regulators would seek to end “illegal activity” in cryptocurrency markets. Co-signed by ten Chinese agencies, the notice the Chinese governments’ ban on crypto trading, threatening legal prosecution against any and all participants. The notice stated regulators would “resolutely clamp down on virtual currency speculation, and related financial activities and misbehavior in order to safeguard people’s properties and maintain economic, financial and social order”.
But not everyone walked away with a loss this week as banks and institutional players managed to reap impressive benefits by cashing in on the crash. Banks and institutions saw a staggering $95 million worth of inflows last week as prices fell. This marked a 126% increase from the prior week. Despite the fact that Bitcoin and Ether Investment products led the majority of the inflows, institutions also appeared to be voracious for Altcoins as products like Polkadot, Solana, and Cardano saw marked increases in their inflows as well. The crackdown has so far proved to be quite bullish for DeFi and its tokens.
Back in May of this year, the Chinese government cracked down on crypto mining, cutting both its’ financial support and electricity supply to speculators. Regulators also banned financial and banking institutions from providing crypto services to customers resulting in a similar tumble which ultimately managed to recover a few days later.
Having grown to be a behemoth worth $2 trillion, the crypto market shows no signs of slowing down despite the many hurdles thrown its way.