In a tweet posted by the official twitter account of Peru’s Central Bank, the reserve bank stated that cryptocurrency was risky mainly due to the hacks plaguing the blockchain industry, and its volatility. The tweet was posted in the wake of the massive loss in the cryptocurrency market which has experienced a drop from $204 billion to $146 billion in the space of just a week.
Peru’s Stance on Cryptocurrency
In the tweet, the central bank of the South American nation also posted an image from Bloomberg on the chart of Bitcoin’s price from December 2017 to mid-November 2018.
Las criptomonedas no están respaldadas por los bancos centrales y tienen riesgos por la alta volatilidad en su precio, casos de fraude y su posible uso en actividades ilícitas. El precio del Bitcoin cayó 56% hasta octubre de 2018 y adicionalmente en 13% en lo que va de noviembre. pic.twitter.com/PL2uqggqFd
— BCRP – Banco Central (@bcrpoficial) November 16, 2018
The translated text following the image goes thus;
“Cryptocurrencies are not supported by central banks and pose risks due to the high volatility in their price, fraud cases and their possible use in illicit activities. Bitcoin’s price fell 56% as of October 2018, and has lost an additional 13% percent in November.”
A Spanish crypto news website, Criptonoticias, recently reported that Peru was not developing nor planning to come up with any regulatory guidelines on cryptocurrency in the nation. However, in September 2017, the country’s Superintendency of Banking and Insurance (SBS) joined the blockchain-related R3 consortium to conduct a study on the blockchain technology and learn if it could be implemented in the country.
However, not considering the Central Bank’s stance on cryptocurrency, the number of crypto traders in Peru has been increasing steadily. A crypto statistics website, Coin Dance from LocalBitcoin has gathered data on the Peru natives’ behavior to cryptocurrency. The result has seen a jump in Bitcoin traded in Peru from 17 BTC a week as at the beginning of the year to 150 BTC a week, as at late September.
Reason for the Market Fall
The crypto market has experienced a sudden and heavy dip since November 14th. Bitcoin has dropped to its 2018 all-time low to under $5,000, and other significant cryptocurrencies have also had their own fair share of the loss, with Bitcoin Cash falling to less than 50% its price. Today, Nov. 20, BTC has hit its lowest mark since October 2017, dwindling to $4,237 at a point in the past 24 hour period.
The dip is as a result of the Bitcoin Cash hard fork, started by blockchain development firm affiliated with Craig S. Wright. The panic in the market is not about the hard fork, however, as Bitcoin Cash hard forks take place twice a year, as it was previously consensual. The decision was not unanimous in this recent hard fork which has resulted in two separate blockchains, and the future of BCH has been murky. Hence, the large pullouts of cash in the crypto world.
The recent comments by the Central Bank, however, might not have an effect on the already growing number of crypto traders, as South American nations’ currencies have been massively losing value, giving rise to hyperinflation. This has been the main reason for the mass adoption of digital currencies in these countries by residents. In recent times, the trading volume of countries like Venezuela, Colombia, and Argentina has drastically increased.