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market | IST

Explained: Will crypto sell-off be contagious to other financial systems?

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Cryptocurrencies fought to find a footing on Monday after even weekend cheerleading from Tesla boss Elon Musk seemed unable to offset selling pressure from spooked investors or nerves stemming from a gathering crackdown on the asset class in China.

Cryptocurrencies fought to find a footing on Monday after even weekend cheerleading from Tesla boss Elon Musk seemed unable to offset selling pressure from spooked investors or nerves stemming from a gathering crackdown on the asset class in China.
Bitcoin climbed as high as $35,970 from Sunday's trough at $31,107, but the growing sense of a shakeout flowing through the frothy market left it struggling to make further gains and it remains some 45 percent below last month's record peak of $64.895.
Now, the cryptocurrency market has a huge asset size and when a large asset size gets shrunk and compressed by half in 10 days flat, there ought to be repercussions in other parts of the financial system - stocks, bonds, currencies, commodities, etc.
So, should a crypto meltdown matter?
The 5 largest cryptocurrencies, even after the decline, have a market capitalisation between $50-700 billion each. Each of the top-5 cryptocurrencies is more valuable than 70 percent of the S&P 500 companies.
The crypto market cap at its peak, which was $2.4 trillion, was a little more than half the value of the S&P financials sector.
CNBC-TV18 Prashant Nair gets more details on whether there is any broader contagion of the crypto sell-off.
Watch the accompanying video for more.
Text inputs from Reuters