MicroStrategy founder and CEO Michael Saylor is revealing the factors that he believes are contributing to the wild price swings in the crypto markets.
In a new interview with CNBC, the Bitcoin (BTC) bull says that the lack of clear regulations plays a part in the volatility of crypto markets as it allows investors to trade in ways normally not permitted when dealing with stocks and other traditional assets.
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“The volatility is driven by the immaturity of the asset class. The lack of wash trading rules – you can buy and sell [crypto assets] within the same hour…I think that’s fairly immature.
I think 20x leverage on the off-shore exchanges, I think the Wild West of crypto derivatives, the cross-collateralization of altcoins into ETH [or] BTC through decentralized finance (DeFi) exchanges on a Saturday night through a very thin piece of liquidity on the 177th-biggest coin – all of those things are a recipe for volatility.”
The MicroStrategy executive also says that while the uncertainty around upcoming regulations may cause more volatility at first, it will eventually lower the price instability of cryptocurrencies, setting the stage up for blue-chip investors to begin supporting digital assets.
“The uncertainty about the regulatory environment because as regulation comes it has an impact on all these different crypto systems and they’re all cross-collateralized to each other. I’d be surprised if there wasn’t volatility. It comes with the territory. There are pros and cons.
I think the volatility will be dampened as the regulation progresses and that will encourage institutional adoption.”
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
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