A huge drop in cryptocurrency prices this week և a rapid return to traditional asset classes, possibly offering a taste of what can happen in the event of more severe shocks.
Some government bonds rose on Wednesday as futures on the S&P 500 stock index weakened, and oil also retreated after bitcoin fell 30 percent to signs that China was pursuing digital signals. The Japanese yen, a currency often in demand during stress, also rose.
After a few hours, bitcoin returned sharply. But it was unusual for failures to capture the attention of key market participants.
“The catalyst for these movements seems to have suddenly broken down into bitcoin,” wrote Richobn McGuire և Lynn Graham-Taylor, Rabobank’s analysts, in their next post the next day. “It simply came to our notice then. “Even an August organ, like Rabo Rates Daily, finally had to put the codes in the center:.”
The Uygh wrote that “it seems difficult to imagine how there can be a direct link between bitcoin gyrations և movements by the global financial market.”
Usually, cryptocurrencies are driven by incomprehensible factors, such as the tweets of bitcoin lover Elon Musk, whose electric car company Tesla bought a large number of tokens. Changes in the price of highly speculative cryptocurrencies are rare if they ever affect regulated and established markets.
But that is about to change.
In the second half of Friday, cryptocurrencies fell sharply again after Chinese Vice Premier Liu Na reaffirmed Beijing’s determination to curb cryptocurrency mining and trading.
The news broke 12 percent of the value of bitcoin, 20 percent of ethereum and 18 percent of dogecoin. The sale seemed to bleed into the US stock market, where the tech-heavy Nasdaq fell in the last trading hours.
Barclays credit analyst Soren Willmann also said that the bitcoin mess shook European corporate bonds. “It’s just hard to dream of backlash, but as far as cryptocurrency is concerned with the weakness of modern tech stocks (no less than Tesla bitcoin stocks), it’s important for European credit, because it’s hard for our markets to ignore it. [S&P 500] “Weakness,” he said. “That said, we would be buyers of any cryptocurrency.”
Regulators around the world are increasingly turning to the cryptocurrency market, mainly in an effort to boost consumer protection, and the question of the viability of bitcoin for more markets has become more pressing among investors.
One theory is that if bitcoin prices slowed, it could deal a significant blow to households as retailers, distorting the notion that a vibrant consumer could continue to grow stock markets.
In addition, some family funds have invested in cryptocurrencies, raising a wave of interest among investment banks seeking to ease demand. On the flip side, a big cryptocurrency could also dampen the market appetite for risky bets.
On the contrary, the cryptocurrency boom has coincided with a decline in stock trading platforms, which are preferred by traders. Therefore, any large, sustained cryptocurrency downturn could prove to be a picket in the more risky parts of the stock market if those retailers return stocks.