As might be expected, Tuesday's Senate hearing on cryptocurrency regulation touched on an oft-discussed facet of digital assets: their price volatility.
Appearing before the Senate Banking Committee, Securities and Exchange Commission chair Jay Clayton and Commodity Futures Trading Commission chair J. Christopher Giancarlo were asked about their views on the zigzagging prices, as well as the factors driving those price changes.
Ultimately, both demurred on offering a definitive point, though Giancarlo, whose agency regulates derivatives, pointed out that volatility in bitcoin isn't quite up to par with the VIX Index, known more commonly as the "fear index."
"Bitcoin's volatility was not as large as other asset classes like [the] VIX. We have seen extreme volatility in bitcoin but in our world [commodities], we are used to volatility in asset classes," he remarked.
Clayton was blunt in his answer to the question of why prices are volatile: "I don’t really know what’s driving volatility in bitcoin and cryptocurrencies," he said, going on to remark:
"[Cryptocurrencies are] not correlated with sovereign currencies, so it must be something different than what would move the dollar. But that's one of the issues before us – there does appear to be a lot of volatility compared to the medium they are supposed to be replacing.”
Asked whether derivatives products like exchange-traded funds could help stabilize bitcoin’s wild price fluctuations, Clayton said it would depend on the investors.
Clayton went so far as to suggest that the agency might one day green-light such a financial product, a notable comment given that the SEC shot down the ETF proposed by investors Cameron and Tyler Winklevoss (that effort remains subject to an appeal).
"If we get comfortable ... then we can move forward," he said.
https://www.coindesk.com/cftcs-giancarlo-used-volatile-assets-like-bitcoin/
Appearing before the Senate Banking Committee, Securities and Exchange Commission chair Jay Clayton and Commodity Futures Trading Commission chair J. Christopher Giancarlo were asked about their views on the zigzagging prices, as well as the factors driving those price changes.
Ultimately, both demurred on offering a definitive point, though Giancarlo, whose agency regulates derivatives, pointed out that volatility in bitcoin isn't quite up to par with the VIX Index, known more commonly as the "fear index."
"Bitcoin's volatility was not as large as other asset classes like [the] VIX. We have seen extreme volatility in bitcoin but in our world [commodities], we are used to volatility in asset classes," he remarked.
Clayton was blunt in his answer to the question of why prices are volatile: "I don’t really know what’s driving volatility in bitcoin and cryptocurrencies," he said, going on to remark:
"[Cryptocurrencies are] not correlated with sovereign currencies, so it must be something different than what would move the dollar. But that's one of the issues before us – there does appear to be a lot of volatility compared to the medium they are supposed to be replacing.”
Asked whether derivatives products like exchange-traded funds could help stabilize bitcoin’s wild price fluctuations, Clayton said it would depend on the investors.
Clayton went so far as to suggest that the agency might one day green-light such a financial product, a notable comment given that the SEC shot down the ETF proposed by investors Cameron and Tyler Winklevoss (that effort remains subject to an appeal).
"If we get comfortable ... then we can move forward," he said.
https://www.coindesk.com/cftcs-giancarlo-used-volatile-assets-like-bitcoin/
We can see different views in here mainly because of varying perspectives. Just to point out one argument, however, why are cryptos being compared to traditional fiat currencies in the sense that the market in the former is tagged as more volatile than that of the latter? It is absurd to take such comparison when in the first place, both have different nature. One is centralized, the other is decentralized. Of course, what can you expect? PRESUMABLY we can say there is quite stability in sovereign currencies while there is chaotic fluctuations in cryptocurrencies because of its nature.
While I am a believer that one day sovereign currencies will be replaced by digital currencies, I still do not subscribe to the idea that cryptos right now have the requisite go-to to replace fiat currencies. It still has so much issues that need to be addressed or put to rest otherwise people from all over the world will be plausibly at a naught in terms of their hard earned monies without the benefit of legal claims.
