Risky Assets, Crypto Depends Also On The US Dollar, Investors Are Asked Not To Include Calculations

Posted on May 16, 2022 in Cryptocurrency

COINHOT – Financial analyst Ariston Tjendra said crypto is included in the risky asset category, even though it has a high rate of return.

Due to the high risk, in recent years, investors have been seen leaving crypto assets and turning to the safer United States (US) dollar.

“Crypto as a digital asset turns out to be very closely related to the US dollar, when there is a change in policy, it must also be followed if digital assets follow the US dollar, why form this cryptocurrency? ” he said quoting YouTube About Money, Monday (16/5/2022).

As is known, the US Central Bank has raised interest rates, thus pushing the currency of Uncle Sam’s country.

According to him, digital assets are actually closely related to the US dollar, especially when the Fed makes major policy changes to control inflation.

“This encourages market participants or investors in crypto to also exit, and reenter the US dollar,” said Ariston.

With the situation of the policy change, he suggested that investors should carefully consider if they want to enter risky assets such as cryptocurrencies.

“Always calculate the risk before entering the financial market and don’t put all your eggs in one basket,” he concluded.

LUNA’s Crypto Price Falls, Investors Lose, Here’s the Condition of the Crypto Trend in the Middle of a Market Collapse

In recent days, the virtual world has been shocked by the collapse of the cryptocurrency market and stories of investors experiencing losses. Unmitigated, the loss is almost 100%. This phenomenon is called ‘cryptocrash’.

Friday (13/05) morning, Denis pooled it in the Terra Luna token (LUNA), one of the cryptocurrencies that experienced the most severe decline. He admitted that his losses had already penetrated 99.99 % .

“Last check, lost 97% in a day. Today has lost 99.99%,” said Denis to the BBC News Indonesia. He asked for anonymity.

Even though he suffered a big loss, Denis admitted that he was not worried because the amount of money he invested in LUNA was not large. The money he uses is also cold money, meaning it is not money he uses for necessities.

On Twitter, several people also shared their loss or their close friends. The amount varies, there are losses of Rp. 6 million, Rp. 100 million, even billions of rupiah. However, BBC Indonesia has not been able to verify this information.

Not only Indonesia, all LUNA investors in various countries also experienced the same thing. On the Reddit forums, several people are talking about suicide related to the loss of LUNA’s investment.

It was even rumored that there were eight suicide values ​​related to the fall of the crypto coin. However, it is claimed to be false information because it has no valid data.

There is no certainty

Researcher from the Institute for Development of Economists and Finance (INDEF) Nailul Huda said the current panic was not something excessive. He considered panic to be natural and natural and was concerned about investors who had to suffer losses.

The head of INDEF’s Center for Innovation and Digital Economy said that most of the crypto market is “uncertainty” and prices are highly volatile. “.

“This crypto asset carries a very high risk. It cannot be predicted accurately,” said Nailul Huda to BBC News Indonesia, Friday (13/05). ). Moreover, price changes in crypto assets, said Huda, can be very drastic, in just a matter of hours.

Why did ‘cryptocrash’ and how unlike is the crypto market?

The fall in the price of crypto assets was caused by the negative sentiment of global financial markets, especially the increase in inflation in the US. In March 2022, US inflation hit 8.5%, the highest level in 40 years.

As a result, the US Central Bank, The Fed, raised its benchmark interest rate.

Another sentiment came from the state of the Covid-19 pandemic in China. The zero Covid policy and strict lockdown have also triggered inflation in the bamboo curtain country. In April 2022, China’s inflation hit 2.1%, the highest since 2021.

Those sentiments lead investors to give up riskier assets such as cryptocurrencies and stocks.

Cryptocrash occurs when popular tokens lose 99% value. In fact, coins that are included in stablecoins are also affected.

A stablecoin is a type of cryptocurrency created to offer a stable price and backed by a reserve asset, such as the US dollar or gold.

Quoted from BBC News, the combined market value of all cryptocurrencies had reached US$1.12 trillion (Rp. 16,363 trillion) on Thursday (12/05), about a third of the value at .5% compared to .5%.

One Bitcoin is Now Worth Around US$27,000 (worth Rp.394 million), the lowest value since December 2020. At the end of last year, Bitcoin had touched a high of US$70,000 (worth) Even though Bitcoin is a type of stablecoin.

Ethereum, Second Largest Coin by Value, Has Lost 20% of Its Value In 24 Hours.

Tether, the most popular stablecoin, also fell from the US dollar peg to an all-time low of US$0.95 (worth Rp13,886.15).

Terra USD (UST), which is usually stable, was also shaken. On Thursday (12/05) UST fell to US$0.4 (worth Rp. 5,486), according to trading website Coin Market Cap. Huda explained that the decline in the price of UST was due to the decrease in the price of Bitcoin which was planned to be disbursed to buy UST.

The decline in UST did not want to affect the decline in LUNA, which supported most of the value of UST as well as its sister coin. LUNA fell from its highest level of US$118 (worth Rp1.7 million), last month, to US$0.09 (worth Rp1,300) on Thursday (12/05).

Panicked investors immediately withdrew from major cryptocurrencies. As a result, the crypto market plummeted.

Crypto investors in Indonesia have surged in recent years

The cryptocurrency market does have a very high level of risk and uncertainty. Unfortunately, according to Huda, investors have not realized this high risk, especially in Indonesia.

“This community is mostly FOMO, afraid of being left behind, so they don’t want to be out of date, they don’t realize that this crypto asset has a very high risk, even though the return win is also high,” said Huda.

For example, Bitcoin. In December 2017, the price was US$20,089 (worth Rp.272 million), but in 2021, the highest price touched US$64,804 (equivalent to Rp.939 million).

Fantastic profits in a short time are indeed one of the attractions for investing in crypto. Not to mention the future lure that says crypto currency is the currency of the future.

Huda said that price increases such as those experienced by Bitcoin have made the number of crypto investors in Indonesia jump sharply, even during the Covid-19 pandemic.

The Ministry of Trade stated that crypto asset trading in Indonesia continues to grow from year to year. In 2020, the value of crypto asset transactions in Indonesia is IDR 64.9 trillion and in 2021 it will skyrocket to IDR 859.4 trillion.

Until last February, the Ministry of Trade noted that the number of crypto investors had even crossed the 12.4 million mark. Even though Huda said that around the end of last year, the number was still around 9 million.

“This extraordinary development needs to be monitored together so that physical trading of crypto assets in Indonesia remains on the right corridor,” said the Deputy Minister of Trade, Jerry Sambuaga in the webinar of the Latest Crypto Discussion on March 28, 2022, quoted from the official website of the Ministry of Trade.

What is the future of crypto in Indonesia?

Huda said the number of crypto investors in Indonesia currently far exceeds the number of investors in the capital market. In 2021, the Indonesia Stock Exchange recorded 7.47 million Single Investor Identification (SID). Even though that number alone has increased by around 92% from 2020.

The Ministry of Trade estimates that crypto asset trading in Indonesia will continue to grow as the number of listed companies trading crypto assets continues to increase.

The trend of crypto investment in Indonesia is also ‘ will continue to soar”, said Huda. Moreover, most crypto investors are millennials and Generation Z.

“They are looking for investment alternatives other than stocks. The fall will definitely be a crypto asset,” said Huda.

So far, Indonesia has defined crypto as a commodity or asset, not a means of payment as is implemented in some countries.

The Ministry of Trade through CoFTRA has issued a number of regulations related to cryptocurrencies. The requirements for issuing crypto assets to be used in Indonesia are regulated in CoFTRA Regulation Number 8 of 2021.

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