Crypto downturn survivors to rival Amazon: BoE

23 Jun 2022

The Bank of England Deputy Governor Jon Cunliffe has said those who ride out the current crypto market downturn could rise to become the technology companies of the future, like Amazon and eBay after the dot-com collapse in the early 2000s.

Whilst at the Point Zero Forum in Zurich yesterday, the influential central banker said: “The analogy for me is the dot-com boom, when $5 trillion was wiped off values. (…) A lot of companies went, but the technology didn’t go away. It came back 10 years later, and those that survived — the Amazons and the eBays — turned out to be the dominant players.”

He added that the crypto tech has “huge applications and potential within the financial sector” despite the current uncertainty. “Whatever happens over the next few months to crypto assets, I expect crypto technology and finance to continue. (…) It has the possibility of huge efficiencies and changes in market structure.”

His comments come as Bitcoin, the world’s largest cryptocurrency, which has shed 57% so far this year, fell below $20,000 recently for the first time since December 2020.

In recent weeks, some of the biggest players in the market continue to struggle in a volatile environment.

Nigel Green, deVere Group CEO, and high-profile crypto advocate was recently quoted in the media as saying: “Many of the largest crypto firms have made huge, unnecessary mistakes in the last few months.”

He noted that they had undertaken expensive TV advertising campaigns, major sponsorships, rolled-out lending models offering astronomical interest rates on crypto deposits, and launched unprecedented hiring sprees.

“Now, what do we have? Firms laying-off swathes of staff, freezing client withdrawals and cutting back on investment,” he says.

“Unfortunately, these brands have made some classic, obvious and avoidable dot-com era errors.

“These mistakes destabilize the industry due to the contagion effect, exacerbate financial chaos for investors and the pain of job losses for so many who were hoping to have a rewarding career in the future of finance.

“Such crypto firms would be better off – for the sake of their clients and the wider industry – growing through investing in top talent, innovation and development, and lobbying for sensible regulation with financial watchdogs.”

The BoE comments this week will be seen as bullish by the crypto market.