Will crypto lead to the next financial crisis?

[brainactive]

Looking at the past financial crises that happened, they all seem to have a few things in common, such as the mass adoption of a new financial product or technology (e.g. mortgage backed securities in 2008, dotcom boom in 2000). Given the extent to which institutions (and some influential figures) have been manipulating crypto recently, do you guys think this narrative is likely?

[zasad@]

Cryptocurrency capitalization is very small. It is enough to sell several tens of thousands of bitcoins and the total capitalization drops by almost 1 trillion.
All capitalization is fake values.
Perhaps when the capitalization of the cryptocurrency market increases several hundred times, it will be a big threat to financial systems.

[davis196]

Mortgage backed securities are not the main reason for the 2008 financial crisis.
Credit rating agencies were selling fake data to banks,and the banks were lending loans that weren't backed by a big enough collateral.This caused a bubble in the US real estate market and when the bubble popped,the people refused to pay their debts and the banks had liquidity issues.
The crypto market won't lead to a financial crisis,because:
1.The banks won't adopt cryptocurrencies.
2.The majority of the people and retail businesses won't adopt cryptocurrency payments.

[jjdub7]

Looking at the past financial crises that happened, they all seem to have a few things in common, such as the mass adoption of a new financial product or technology (e.g. mortgage backed securities in 2008, dotcom boom in 2000). Given the extent to which institutions (and some influential figures) have been manipulating crypto recently, do you guys think this narrative is likely?

Personally, I do not think that cryptocurrencies could be the cause of a financial crisis in the near future. We may be on the verge of something like this and the collapse of the US dollar, but this will not be related to cryptocurrencies.

If US policy continues and they continue to accumulate foreign debt with no visible effect on the economy, it could lead to a collapse of the dollar, which will affect the financial picture around the world.

[Tytanowy Janusz]

Looking at the past financial crises that happened, they all seem to have a few things in common, such as the mass adoption of a new financial product or technology (e.g. mortgage backed securities in 2008, dotcom boom in 2000). Given the extent to which institutions (and some influential figures) have been manipulating crypto recently, do you guys think this narrative is likely?

You confuse financial crisis with market crash. Those are 2 separate things.

And crypto is too small. Way to small to matter. Whole crypto industry is as big as Apple company. You could as well ask "will we see next financial crisis because of bad sale of the new IMac pro" ?

Next financial crisis already have its "sponsor". Its depth bubble, QE bubble.

[pixie85]

OP is probably trying to start a discussion in response to some recent articles like this one
https://theweek.com/articles/983641/cryptocurrency-cause-next-financial-crisis

I feel like it could start a fiat money crisis and I'm saying it because there have been rumors that banks will start to ask you to pay for your account, just like they ask you to pay for a credit card.
Bank services used to be more or less free with only some paid services like instant transfers, currency exchange, loans and so on. Now they are going to charge you monthly for your account. If that happens more people will decide to withdraw.

[kryptqnick]

Bitcoin is not as integrated into global economy as other finance-related things. After all, the global economy is still in big trouble because of the pandemic, but Bitcoin has been growing for most of the pandemic. So I don't think cryptos can trigger the next global financial crisis. They might go down with other things or rise at their expense, but probably cannot be the cause. Speaking of the cause, aren't global crises natural and supposed to happen once in a while in the current economy? It can be postponed or come a little early, it can be more severe or milder, but it's not completely avoidable.

[Obito]

You are looking at bitcoin in a tunnel vision, there are a lot of different factors that causes a financial crisis. Also, 2008 crisis is a year older than bitcoin since it was developed in 2009 and I think the reason for that crisis is the housing prices or the mortgage in housing. Also, bitcoin is decentralized so there's no way that it is tied to mainstream economy.

[ropyu1978]

will crypto cause the financial crisis ,, before the arrival of bitcoin, the global crisis also occurred in 2004 ,, and now the global crisis is happening again because of the pandemic problem ,, many jobs are restricted, flights between countries are restricted, so in my opinion cryptocurrency is not the cause of financial ruin global ..

[acener]

Isn't it funny if it would be the lead to the next financial crisis?
Since many of the old or real crypto enthusiasm believe or thinks that Satoshi creates Bitcoin because of it?
And it is created to give us financial freedom but in the end it would be financial crisis.(If it would really be the lead to the next financial crisis)
But I think it would not be the lead or reason for the next financial crisis like most of us who answered this question.

[AicecreaME]

I don't think so.

Only 2.8% of the population globally owns cryptocurrency, it's too far on making the next financial crisis just because of cryptocurrency, besides, it's the exact opposite. Fiat is the reason why we are experiencing global crisis, that worsen because of the pandemic, fiat is trash to be honest, because of inflation.

If you'll think about it, the positive things about Bitcoin always outshines the negative temporary bad news about it, like banning cryptocurrency in a certain country and will uplift it after a while.

[sapnu]

Just by considering the fact that not everyone knows about crypto nor the world's economy relies on it, we can already see that it wouldn't be the cause for another financial crisis. It is not even legal on many countries still and its value is not even stable due to high volatility so the world would definitely try and be dependent on it. There maybe a crisis in the crypto world at the moment but that does not mean real world will also experience the same thing. Let us know the use of bitcoin more so we wouldn't wonder anymore what it could affect and what it cannot.

[serjent05]

It may lead to the next financial crisis of a little percentage of the population that patronizes Crypto and buy at its peak and sells at a loss when its prices dump.  Honestly, what made you (@OP) think that there is a possibility that crypto will lead the world to the next financial crisis?  With its little effect on the economy, yes it is emerging but it is not that huge enough to have a disastrous effect globally.  Maybe to selective individuals that do not know how to handle their emotions and bought in FOMO and panic sell at a loss.

[uneng]

I think we are living a financial crisis already due to governments printing money infinitely to maintain a system that doesn't work in a sustainable way. Bitcoin is more likely to be part of the solution than the problem itself, because during crisis times investments like bitcoin can help people to protect their money against corrosive inflation.
You pointed out mass adoption can lead to crisis, but I think we should keep in mind bitcoin supply is limited, while another products or technologies you mentioned weren't.

[fiulpro]

Looking at the past financial crises that happened, they all seem to have a few things in common, such as the mass adoption of a new financial product or technology (e.g. mortgage backed securities in 2008, dotcom boom in 2000). Given the extent to which institutions (and some influential figures) have been manipulating crypto recently, do you guys think this narrative is likely?

It for sure is but we have to understand that people who are investing in cryptocurrencies are of these types:-

(Considering their crypto Investments are not the only investments that they have)

1. Small holders
    They are holding small about of cryptos and they can also manage any loss without adverse effects for the long term.

2. Whales
    People who have a lot of money invested in cryptocurrencies and these people can take a loss anytime. They already have big companies and if something happens they can just move down their financial class.

3. Traders
   They will even make money with the price is down. It's all about the Volatility for them.

-----
I think the chances are low for sure.

[Coyster]

The believe institutional Investors have in the network is increasing, but that's cause there is already a financial crisis/inflation, which wasn't caused by Bitcoin in the first place, but prolly by the pandemic and printing of more money to control the pandemic, thus, Bitcoin or cryptocurrencies imo can't cause a financial crisis, but it can be a hedge for people to hold the value of their funds when the economy is struggling and cost of living is skyrocketing due to a reduction in the value of Fiat.

[hugeblack]

If you study the history of bubbles and economic disasters, you will find that the collapse was the end result of a long series of catastrophic mistakes represented in weak supervision of the banking sector, inequity in the distribution of capital and random printing of money. The current financial system is like a domino stone, which means that the collapse of any part will ultimately lead to a global financial crisis, so the question is when will it occur, not the causes, or the correct time when the straw that will split the camel’s back will come.

[dothebeats]

The events leading to the dotcom bubble and the 2008 financial crisis required tons of investments and money from traders and normal people alike to happen—an amount which isn’t even comparable to the total crypto market capitalization. Perhaps it could be a precursor to something bigger than itself, but I do not see the crypto hype leading to a financial crisis given that traditional assets such as stocks are also receiving an insane amount of money injection for the past decade.

[Argoo]

Looking at the past financial crises that happened, they all seem to have a few things in common, such as the mass adoption of a new financial product or technology (e.g. mortgage backed securities in 2008, dotcom boom in 2000). Given the extent to which institutions (and some influential figures) have been manipulating crypto recently, do you guys think this narrative is likely?

Cryptocurrency capitalization is not yet large enough to have a significant impact on the global financial system and pose any threat to it. This has already been stated many times by various gatherings of representatives of states, including the G20 countries, as well as specialized government bodies, as was the case recently in the United States. In addition, cryptocurrency is practically not connected with the economies of states, and therefore cannot cause a global economic crisis. Such claims have no economic basis.

[hatshepsut93]

Crypto bubble was/is still small compared to dotcom bubble or the housing bubble, so it won't have any macroeconomic effects. Institutions only started investing in Bitcoin in this cycle, and they don't touch altcoins, and they didn't put even that much money into it. Bitcoin can go to zero tomorrow and these institutions won't bat an eye.