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‘Bitcoin is not an asset that is designed to be leveraged,’ says Caitlin Long



All eyes are on Bitcoin (BTC), with the biggest cryptocurrency taking pictures up previous $40,000 on Monday. Unsurprisingly, the value enhance occurred shortly after Tesla CEO Elon Musk tweeted that the electric-car firm would probably settle for BTC funds as soon as extra miners verify inexperienced vitality initiatives. 

But, whereas Musk’s tweet could have pushed the value of Bitcoin up, some trade consultants imagine that Bitcoin is not a cryptocurrency that ought to be leveraged. For instance, throughout an unique interview with Cointelegraph at Bitcoin 2021 in Miami, Caitlin Long, founder and CEO of Avanti Monetary, mentioned that not like different cryptocurrencies, solvency issues greater than leverage and liquidity when it comes to Bitcoin:

“Once you get into Bitcoin and you start losing money, I consider that to be really valuable tuition for really learning what Bitcoin is. We’ve got a lot of new people in this industry now who are going through those lessons, and hopefully, folks will learn from them. Especially in this bull market, there’s been so much leverage added to the system. For those of us who’ve been around a long time, we’ve learned these lessons a long time ago — you don’t leverage Bitcoin.”

A regulatory push for Bitcoin and stablecoins

As well as to advising that Bitcoin shouldn’t be leveraged, Long talked about that there are new rules for Bitcoin popping out of Washington, DC — one thing she believes has been coordinated with different authorities our bodies. “It was Ray Dalio who said that Bitcoin’s biggest threat is success — because that means the regulators are going to be cracking down,” mentioned Long.

Though this may occasionally be, Long identified that rules will not ban Bitcoin or different cryptocurrencies, so long as customers comply. She mentioned:

“The punchline is that if you pay your taxes and you get regulated, and you don’t take shortcuts, you’re going to be okay. Those that are trying to commit crimes, or defraud consumers, or not pay taxes and not comply with the law, then those people are not going to be okay.”

Long additionally famous that rules round stablecoins are a precedence for lawmakers. Particularly, this may guarantee that stablecoins don’t infect the U.S. greenback cost system with liquidity threat. To place this into perspective, Long talked about the unintentional laborious fork that occurred for just a few hours on Ethereum throughout November 2020, saying:

“At the time, I was thinking, ‘What would happen if all the Ethereum ERC-20 stablecoins had to be redeemed within the span of minutes because they had to be burned on one fork and reissued on another?’ That is not a risk that the traditional financial system has been thinking about.”

Furthermore, Long commented on the dangers related to stablecoins again in Could, warning that your entire stablecoin market has the potential to deliver down different tokens upon a credit score market correction.

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