Crypto Analyzer

Experts Believe Crypto Crash Won’t Plummet US Economy

The recent crypto market crash has investors on edge as Bitcoin and Ethereum prices plummet. Despite the fear in the market, experts are not concerned about the impact on the U.S. economy.

Debt Market Insulated From Crypto Influence

According to a report by CNBC, economists and bankers agree that the crypto market’s meltdown is not a significant threat to the U.S. economy. Joshua Gans, an economist from the University of Toronto, highlighted that cryptocurrencies make up a small portion of the economy. He emphasized the importance of considering the relationship between cryptocurrencies and the larger debt market, which has a much bigger impact on the U.S. economy.

Gans pointed out that crypto is not widely used as collateral for real-world debts, limiting the potential for widespread economic impact. The total capitalization of the cryptocurrency market, currently around $800 billion, pales in comparison to the $43 trillion total capitalization of the U.S. housing market.

Crypto’s Limited Influence on the Real World

Experts note that exposure to crypto in the debt market is low, with most crypto holders using their assets for crypto-to-crypto loans rather than borrowing traditional currency. Goldman Sachs reported that only 0.3% of U.S. households hold cryptocurrencies, minimizing the potential impact of the crypto crash on overall spending.

Morgan Stanley echoed similar sentiments, highlighting that the weak link between the debt market and cryptocurrencies limits the fallout from the crypto crash to the crypto market alone. Venture capitalist Kevin O’Leary added that institutional holdings in crypto are not significant enough to pose a systemic risk.

U.S. Economy’s Influence on Crypto

While financial institutions have started offering exposure to cryptocurrencies, experts believe that the U.S. economy has a more significant impact on the crypto market’s volatility. Factors like unexpected rate hikes and recession risks can contribute to the downturn in risk assets, including cryptocurrencies.

Overall, experts maintain that the crypto crash is unlikely to have a substantial negative impact on the broader U.S. economy. As the market continues to navigate through the current volatility, attention remains focused on the resilience of the debt market and the real-world implications of cryptocurrency fluctuations.

For more information, you can read the full article on TechTimes.