IMF: Bitcoin decline has no impact on financial stability

Last Updated: 27 July 2022

The International Monetary Fund (IMF) does not think that bitcoin’s bear market is having an impact on the world’s financial stability.

In a report called World Economic Outlook Update: Gloomy and More Uncertain, the organisation acknowledges the large declines in the industry. The price of bitcoin currently stands at around $21,000, some 70% lower than its record price in 2021.

The title leaves no room for doubt. The IMF is looking at a global recession.

Uncertainty

The IMF does see the effects of the big drop in the industry itself: “This has led to big losses in crypto investments, the failure of algorithmic stablecoins and big losses in crypto-hedge funds, but spillovers to the broader financial system have been limited so far.”

Bitcoin is no small boy, and even with some $400 billion in market capitalisation, it is not yet a major player on a global scale . Much exposure to traditional finance is often experimental.

The uncertainty caused by the war in Ukraine is also mentioned, as are supply chain problems. The situation in the world is causing ‘risky’ investments to be postponed or reversed. Bitcoin falls into this category in many portfolios.

IMF

The IMF is not exactly at the forefront of the bitcoin world. The International Monetary Fund is a UN organisation for international monetary cooperation, combating financial crises, and providing credit for states with payment problems.

At least, that is its promise. In practice, it offers credits and loans in many different countries. So it helps countries, but they want it exactly the way they want it. Bitcoin plays no part in this. In fact, for example, Argentina, was strongly advised against embracing bitcoin frequently. The organisation is also concerned about developments in El Salvador and the Central African Republic. Both countries have, in their own way, embraced bitcoin.

Author

  • I first came into contact with Bitcoin in 2017 - and since then, the topic of cryptocurrencies has never left me. For this reason, I have also made BTC & Co. part of my profession and write as a freelance author for crypto publications.

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