Concerns that the cryptocurrency crash will impact the wider economy

Cryptocurrencies and the closely related NFT market are in trouble – and there are fears that the “crypto crash” will impact the wider economy.

Bernard Hickey, editor of the Kākā newsletter, told Q+A on Sunday that the drop in value of some cryptocurrencies this week was “heartbreaking for people who have their money in some sort of crypto asset.”

“This week we saw the back of one of the ‘stable coins’ break, now it wasn’t the biggest, but seeing something that was supposed to be locked to the beat of the US dollar completely disintegrate really surprised many people.

“It really set the whole industry back about a trillion dollars in value.”

Trade commentator Rebecca Stevenson agreed that “it’s been really devastating for a lot of crypto investors.”

“For every person who has done well and had dinner over the past few years with crypto because it has done extremely well, there are also only average regular investors and their stories of devastation and financial struggles. that they cross. is actually very touching and touching.

And there are fears that if “stablecoins” that are backed by real assets were to face too much pressure, “you could see the crypto crash seep into the real world, the real markets,” Hickey said. .

When asked how a complete crash of Bitcoin and other cryptocurrencies would affect the wider economy, Stevenson said, “When we have this situation where we now have real concerns about this asset not regulated that overrides and affects other things we have control over. , we will see the regulations.

“It has grown upside down and now we see it has become so large that it could potentially affect other asset classes, which is a big concern.”

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