There is a recent article on Al Jazeera (English) with the title “Is Crypto About to Go Extinct?” that examines the current state of the crypto market in view of the recent fallout of FTX and the crypto market crash and discusses the future of cryptocurrency. Professor Tim Leung, who has written research articles on cryptocurrency price dynamics and taught a cryptocurrency course at University of Washington, was interviewed and quoted multiple times throughout the article.
He said that the FTX crash had a profoundly negative impact and warned of spillover effects throughout 2023. In addition, crypto mining companies, which generate virtual money – or coins – using energy-guzzling supercomputers, will suffer under the current market conditions, Prof. Leung said.
Cryptocurrency advocats champion the independence of the cryptocurrency from the government and banking systems, but it also depends on financing from traditional markets. How much of that funding will continue or grow in the current climate is unclear.
Reduced demand for coins because of low trading volumes and high energy prices will squeeze the viability of their business model. “I see this phase lasting through 2023,” he said. “It’s more likely to be a crypto ice age rather than a crypto winter.”
Many crypto firms have a footprint across multiple geographical regions. Prof. Leung called for an internationally coordinated effort to design and enforce regulations in the sector. “A global framework to regulate crypto is indeed essential,” he said.
Tim Leung, Boeing Professor of Applied Mathematics and Computational Finance & Risk Management (CFRM) Director at the University of Washington in Seattle. He has worked on a variety of problems, such as derivatives pricing, algorithmic trading, exchange-traded funds (ETFs), commodities and cryptocurrencies, and has published over 60 articles and several books. On cryptocurrency, his work includes a journal article on constructing cointegrated portfolios of cryptocurrencies. He pioneered an approach to analyze cryptocurrency price evolution using a multiscale decomposition method that is adaptive to the time-varying volatility of cryptocurrency. For more on his work and contact information, visit http://faculty.washington.edu/timleung/
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