Will a cryptocurrency crash kill the already-hit US economy?

The U.S. economy remains besieged as follows: Record high inflation, Rising interest rates And international turmoil continues to push up the cost of basic necessities such as food, gas and housing.

In the broader turmoil, soaring at the end of last year, the crypto market worth over $ 3 trillion fell dramatically, losing nearly $ 2 trillion in value, about half of all digital currency investors. Was placed in the water.

Will Crypto’s current tanking put the already-hit domestic economy in a more dire situation?

Is the slump in cryptocurrencies an economic coup? There are many pessimistic reasons around the crypto market and some more mainstream equity and bond markets, experts said. NBC News They have not yet seen any signs of transmission from cryptocurrency dips that could infect the larger economy.

Joshua Gans, an economist at the University of Toronto, told NBC that he believes that most banks and other financial institutions have limited exposure to crypto price fluctuations and has only recently begun to do so. rice field. Office focused on new crypto In limited cases, digital tokens Loan collateral..

“Cryptocurrencies are not completely collateralized,” Guns said. “Did one of these banks do something very stupid? Of course, I don’t think so.”

“They all have their crypto department, but are you betting on it? I don’t really think they have,” he said. He added that “one ridiculous bank we can handle”, even if the bank takes too much crypto risk.

What that means for the average American: According to CoinGecko, the market capitalization of cryptocurrencies plummeted from a record high of $ 3 trillion in November to just under $ 1.3 trillion as of Friday.

Market watch According to estimates based on various studies by Goldman Sachs analysts, U.S. households report about one-third of the global crypto market, or about $ 423 billion as of Thursday. .. The recent plunge in the crypto market is “very small” compared to the net worth of US households, which reached $ 150 trillion in 2021, bank analysts wrote in a Thursday note.

According to Goldman Sachs analysts, recent price cuts in digital assets have reduced US household wealth by about $ 300 billion, while cryptocurrency holdings account for only 0.3% of US household net worth. Occupy. In contrast, corporate stocks make up about 33% of households’ net worth at the end of 2021, but recent losses could have eliminated $ 8 trillion in their wealth.

“These patterns mean that stock price volatility is a major contributor to changes in household net worth, but cryptocurrencies are only a small contributor,” analysts write.

Is it time to bail or buy? According to a survey by a blockchain analysis company GlassnodeWhen cryptocurrencies were priced at $ 33,600 per unit, only 60% of Bitcoin investments continued to make a profit, luck.. The remaining 40% of the investment sank below the surface. Bitcoin’s price is even lower, staying at around $ 29,000 per token on Friday, leaving a larger share of the investment in the red. CEO Peter Smith said CNBC More pain will come this week and more risks will be exposed, but in the end it is good for a decentralized economy.

For crypto investors, Smith said the lessons of the past few weeks should return to crypto, which is the equivalent of the traditional concept of market investment in the dollar cost averaging method-slowly relocating asset positions over time. Build with and keep all money private to a single attack of volatility.

“Slowly average,” Smith told CNBC’s “Worldwide Exchange.”

Bitcoin Earlier this week, it reached its lowest level since December 2020, below $ 26,000, and shares in a listed cryptocurrency broker. Coinbase This week it has dropped by 74% so far,

“And you need to be prepared to hold it for quite some time,” Smith added. “We are still in the early stages of building this entire financial system.”

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https://www./u-s-world/2022/5/20/23132625/crypto-crash-bitcoin-ethereum-luna-inflation-economy-killer-just-another-rollercoaster-moment Will a cryptocurrency crash kill the already-hit US economy?

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