[ad_1]
This week has seen a dramatic drop in cryptocurrency prices and a reversal in traditional asset classes, offering a taste of what could happen in the event of a more severe shake.
Several government bonds won the price on Wednesday as the US S&P 500 stock index fell sharply and oil also fell back after a 30 percent drop in the price of bitcoin as signals that China was preparing to crack down on digital tokens. The Japanese yen – a currency often demanded during times of stress – also rose.
A few hours later, bitcoin had a big bounce. But it was unusual for the restrictions to attract the attention of major market participants.
“It seems that the catalyst for these movements has been a sudden round in bitcoin,” wrote Richard McGuire and Lyn Graham-Taylor, Rabobank rate analysts, in a regular note the next day. “So here we are. Despite being an organ like Rabo Rates Daily in August, it is finally forced to put cryptocurrencies first and foremost. ”
The pair wrote that “it seems difficult to think about how there can be a direct link between bitcoin rotations and global financial market movements.”
Typically, crypto prices are caused by obscure factors, such as tweets from bitcoin fans Elon Musk, whose electric vehicle company Tesla bought large numbers of tokens. In highly speculative cryptocurrencies, price changes are rare if they ever affect regulated and consolidated markets.
But that may start to change.
On Friday evening, cryptocurrencies collapsed sharply after Chinese Vice Premier Liu He confirmed his decision to reduce cryptocurrency mining and trade in Beijing.
The news removed 12% of bitcoin, 20% from ethereum and 18% from dogecoin. It looks like it was sold into the U.S. stock market in blood, and there the heavy Nasdaq technology fell in the last hour of trading.
At Barclays, credit analyst Soren Willemann also noted that the bitcoin turmoil has shaken European corporate bonds. “The direct implications are hard to dream of, but insofar as crypto corrections are linked to the weakness of the shares of modern technology companies (at least Tesla’s bitcoin holdings), it matters to European credit, as our markets make it difficult to ignore [S&P 500] weakness, “he said.” That being said, we would be buyers in an immersion caused by cryptocurrencies. “
As regulators around the world increasingly surround the cryptocurrency market, especially in an effort to strengthen consumer protections, bitcoin has become a deeper question among investors about its importance to broad markets.
One theory is that if bitcoin were to know prices, this could be a significant blow to retail economies for home investors, dismissing the narrative that strong consumers can continue to promote stock markets.
In addition, some funds and family offices have put money into cryptocurrencies, which have sparked a lot of interest among investment banks that want to facilitate the request. On the margins, large declines in cryptocurrencies can also starve the market for dangerous bets.
The counterpoint is that the growth of crypto trading has coincided with the decline in volumes on stock trading platforms driven by day traders. A large and lasting fall in cryptography may be the driving force behind the capture of the most risky parts of the market if these retail investors return to their shares.
[ad_2]
Source link
