UBS Warns Bitcoin's Drop May Trigger 'Crypto Winter': Report
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Bitcoin's price drop may be the beginning of a new "crypto winter." At least analysts at investment bank UBS believe so, Business Insider has learned. In a recent report, the experts warn the recovery from a new crisis might take years should the market continue to decline.

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The group of analysts led by James Malcolm says that the policy driven by the Federal Reserve in 2022 will likely dent the appeal of cryptocurrencies, including bitcoin (EXANTE: Bitcoin). The analysts claim that rising interest rates are "putting paid" to arguments that the largest cryptocurrency by market capitalization is a good way to store value and hedge inflation risks.

Fidelity Hints More Sovereign Nation States Will Acquire Bitcoin in 2022

In addition to rising interest rates, other risks like technology shortcomings and regulation could also interfere with the development of the industry, the UBS analysts noted. For instance, blockchain technology is hard to scale up given its decentralized architecture.

"High-flying stablecoins and [decentralized finance] projects seem almost sure to face bigger setbacks from authorities in the coming months," the analysts say.

In September last year, iHodl reported that the Federal Reserve sees no need to ban stablecoins or cryptocurrencies like China did. According to Federal Reserve Chair, Jerome Powell, the financial watchdog "has no intention to ban" cryptocurrencies like bitcoin (EXANTE: Bitcoin) or stablecoins.

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