What about the “normal stock market”?
The traditional financial markets (stocks and bonds) have also been negative in recent days. Experts say that this stock market disruption is partly responsible for the losses in the crypto market.
Astonishing. Proponents of crypto have described the independence of the traditional system – with all the influence of banks and governments – as a huge advantage of digital currencies. “But crypto goes further than we thought,” says Brosens.
For example, interest rate hikes in the US and the UK and the prospect of rate hikes in Europe also seem to affect the crypto market. “If safer alternatives like savings or bonds come back better, crypto could become less attractive again,” says Brosens.
The crypto market has almost no rules and investors are less protected by regulators than, for example, by trading stocks. “Crypto is still considered risky and that has been proven in recent days,” Slagter agrees. “In any case, since the war, investors are increasingly asking themselves: do I dare to invest with risk?” says Brosens. adds Brosens.
Who is affected by this?
According to estimates by research agency Kantar at the end of last year, about 1.6 million Dutch people invest in cryptocurrencies. More than a third of these were added last year – at relatively high prices.
An earlier study commissioned by the Netherlands Authority for the Financial Markets (AFM) showed that two-thirds of Dutch crypto investors own less than 2,500 euros in cryptocurrencies. Slightly less than half trades on just under 500 euros.
But there are also about 100,000 Dutch people who are struggling financially to cope with the sharp fall in prices, according to the AFM.
“I still don’t see the entire financial system being compromised if there is a disruption in the crypto market,” Brosens said. But that could change: “The traditional system and the crypto market are becoming more and more intertwined, so investment funds are also investing in crypto. That increases the risks.”
Who deserves this?
“For every loser, there is a winner somewhere, especially in the crypto market,” says Brosens. In this case, the winners are investors who sell their crypto just in time. Or people who have successfully bet on price falls (going short). “But there are also a lot of risks.”
What is going to happen now?
Slagter certainly expects Bitcoin to trade independently of the mainstream stock market soon. But that depends on the central bank’s interest rate decisions,” he said.
Brosens also has trouble making a price prediction. First, there is a lot of panic in the crypto market right now. “But now that prices are lower, investors will also find it a good time to get in. The real question is whether panicked investors and new entrants will be equal.”
Source: NOS
Smith Charles is a talented entertainment journalist and author at The Nation View. He has a passion for all things entertainment and writes about the latest movies, TV shows, music, and celebrity news. He’s known for his in-depth interviews with actors, musicians, and other industry figures, and his ability to provide unique perspectives on the entertainment industry.
