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In the popular TV series Game of Thrones, the motto of House Stark was "Winter is coming". This is meant to be a warning and to be constantly vigilant. As they are one of the great Kingdoms of the north, the winter would hit them particularly hard.
In the crypto space, with the wild swings in the market, we could say that any market shocks could hit the crypto markets very hard too. But what shocks could cause such a reaction?
Regulatory Risk
The main risk that could cause a coming crypto winter is some regulation from the EU and US. With the speed at which financial sanctions are being imposed on Russia to de-westernise them, the speed at which any crypto regulation would come could be very fast.
The EU has said they will not ban Bitcoin yet but the Biden Administration has said they want to regulate Crypto. What could this mean going forward?
The recent report from Biden lays out some of their points. It looks like they want to regulate the larger exchanges and implement CBDCs for cross-border payments. If there is any ban on private crypto or large scale restrictions in the US or EU, this could cause a crypto winter.
Jon Snow was really a southerner from London
The CBDCs won't be able to compete with any private crypto, but the Elite have ways in which they will try to force their usage. The importance and control of the central banks are looking to fall and they don't want that.
It could be that there will be some regulation of the large centralised exchanges to force compliance with the initial 2 layers of CBDCs that will be implemented. Once the 2 layers of CBDCs are in circulation, there will likely be a rug pull on the 2nd layer and the total control through CBDCs will be the only cryptos allowed.
All is not lost however, with the fast developing Defi sector, there will be private crypto that will retain its value and become the de facto money of the future. If the Defi ice wall doesn't hold, then Westeros becomes toast!
Thanks for reading!
