- The rapid crash in bitcoin challenges the notion that it's a stable store of value, and raises concerns about possible spillover into other markets.
- The effects of bitcoin and other cryptocurrencies on broader markets could rise if they become more integrated into Wall Street machinery, analysts say.
- The crash, which took bitcoin prices to below $10,000 after having reached a peak near $20,000, shows the market's "explosively volatile and unpredictable" nature.
ADVERTISEMENT
The bitcoin crash could be a blessing in disguise for the US financial system
The rapid crash in bitcoin challenges the notion that it's a stable store of value, and raises concerns about possible spillover into other markets.
US financial regulators may have just caught a major break when it comes to overseeing the roughshod bitcoin market.
It looks like regulators, particularly in South Korea and China, are set to clamp down on cryptocurrencies, a move that has triggered a reversal in the stratospheric rally in bitcoin this week, pushing its price, which peaked at nearly $20,000, below $10,000.
The consensus for now is that bitcoin is too divorced from the traditional banking system to have any ripples on financial stability, although traders warn that could change in the future as Wall Street seeks to own a bigger slice of the digital payments industry.
ADVERTISEMENT
Incoming Fed Chair Jerome Powell has also weighed in on the matter, arguing that "innovation not come at the cost of a safe and secure payment system that retains the confidence of its end users."
He added, in an October speech, that "fintech firms and banks must each play a role in assuring that enhancements to convenience and speed do not undermine safety and security."
JOIN OUR PULSE COMMUNITY!
ADVERTISEMENT
Eyewitness? Submit your stories now via social or:
Email: eyewitness@pulse.ng
ADVERTISEMENT