South Korean experts via local media have reported that cryptocurrencies are a “bad choice” for the “safe haven” of the COVID-19 pandemic.
Cryptocurrencies are not a “safe haven” during a pandemic
According to the portal The Scoop, Professor Hong Ki-hoon of the University of Hongik, said that digital assets such as Bitcoin (BTC) should not be considered a “safe haven” to the same extent as gold, dollar, or even US Treasury bonds. He did not deny, however, that volatility in the financial markets causes that the cryptocurrency market accumulates more and more money.
“For an asset to be a safe haven, it must meet two conditions. Firstly, its volatility must be low, and secondly, when market volatility is expected to increase, its value should increase. Cryptocurrencies do not meet these conditions. “
– said Hong Ki-hoon, professor of the Business Administration Department of Hongik University.
The professor commented on the reasons for the increase in the volume of cryptocurrencies during the outbreak of the coronavirus pandemic as follows:
“The reason for the increase in volume after the collapse of markets was that the desire to invest in markets with greater volatility contributed to offsetting the depreciated asset value.”
Fears due to lack of regulation in South Korea
The article also expressed concerns about “market manipulation.” It stated that the cryptocurrency environment in South Korea is not regulated enough. Experts believe that the current popularity of the market does not dispel the concerns of investors who are still hesitant about buying cryptocurrencies.
An anonymous investor quoted by The Scoop said:
“Individual investors are often unable to properly manage risk in the stock market. On the other hand, on the cryptocurrency market, risk assessment is practically impossible. Investors need to understand this before investing in cryptocurrencies. “
On May 27, the South Korean Ministry of Economy and Finance announced that it was preparing to amend the bill to introduce an income tax on cryptocurrency trading. Taxing digital assets can affect the adoption of cryptocurrencies in everyday life, and thus their profitability.
What else is going on in South Korea?
At the end of last year, the South Korean Supreme Court ruled that cryptocurrencies have “economic value.”
As reported at the end of May, the University of Daegu concluded an agreement with the Korean Association of Artificial Intelligence and together they will create a special campus specializing in blockchain and AI technology.
A few days ago, we also learned that due to a decline in tourism due to a coronavirus pandemic, vendors in South Korea will start accepting the digital yuan.