“Think twice before buying cryptocurrencies” – New York Attorney General

 

Yesterday, New York State caused quite a stir in the crypto industry. New York is known for its hostile attitude towards the emerging asset class.

Some believed that electing Eric Adams for mayor would push things in favor of cryptocurrencies since he was running on a pro-bitcoin platform, but the opposite has happened. Adams changed his stance on digital assets, crypto mining and other important issues.

At the state level, things are even worse for the crypto industry. The New York state legislature has passed legislation that could limit bitcoin mining.

The law comes as a result of concerns raised by local and state-level government agencies, numerous environmental groups, and other organizations who claim that Bitcoin mining is having a negative impact on the planet. This claim is challenged by recent data.

New York Attorney General Letitia James echoed the position of other US officials. Through her Twitter account, James called the crypto market "extremely unpredictable" and claimed the sector has seen "record lows" that have caused investors to lose "hundreds of billions."

James added the following to a statement that drew a negative reaction across the industry:

New Yorkers should be cautious and think twice before pouring their hard-earned cash into this unstable market.

James began her mandate on January 1, 2019. At that time, bitcoin was trading at around $3,500 after a month-long downtrend. Yesterday, when James made her statement, Bitcoin was trading at just under $29,500 and the entire sector recorded a total market cap of over $1.5 trillion. Since James took office, bitcoin alone has increased in price almost 20 times.

It is now clear that Bitcoin is often criticized for known reasons. The volatility of cryptocurrencies is also often criticized by the media. Nevertheless, one should be aware that the Bitcoin course has always moved in cycles in the past.

There have been exorbitant bull runs that catapulted BTC from a few dollars to just under $1,000 in 2013. This was followed by a bear market until 2016, the year of Bitcoin Halving. What followed was another steep increase until the end of 2017 to almost $20,000 per Bitcoin before the crash started again and Bitcoin dropped to just over $3,000.

The next Bitcoin halving followed in 2020 and a bull run until mid-2021, which pushed the Bitcoin price to over $60,000. It seems that this development resembles a pattern in the past. While we are indeed in a bear market now, the long-term outlook is consistently bullish.

Especially with such high inflation, top cryptocurrencies can certainly offer a long-term alternative. Even if the past is no guarantee for the future, one should be aware that the Bitcoin industry has grown extremely in recent years and will continue to grow.

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Will Bitcoin & Co. be ousted from New York?

Thus, investors in the crypto industry not only pointed out that the sector is trading at a multi-year high, but the government official's statement only highlights the losses while omitting those of the traditional market, as well as forgetting about the exorbitant gains in the past mention. Investment firm Coinshares Chief Strategy Officer (CSO), Meltem Demirors, responded to James with the following statement:

Is it normal for an elected official to make investment recommendations? It seems very… specific to focus on a ~$1 trillion global market and just ignore the stock market, a ~$50 trillion market in the US alone that impacts more of their constituents and is just as volatile.

New York's hostile attitude toward the crypto industry has prompted multiple exchanges , platforms, products, and companies to either abandon New York for more favorable states or ban New Yorkers from their trading venues. Lawmakers, regulators and government officials claim they are "protecting" consumers.

Hester Peirce, commissioner at the US Securities and Exchange Commission (SEC), has expressed frustration with the way regulations and laws are affecting financial innovation across the country.

Peirce is a big proponent of an approach that would allow the burgeoning industry to thrive while regulators work together to figure out how best to protect investors and modernize existing rules. 

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