Will crypto lead to the next financial crisis?

[samsul1234]

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?

hello sir, in my opinion bitcoin is currently in its peak era and will have a bad impact on global finance, for example, now many people flock to bitcoin when bitcoin reaches its peak, and when it is below people who were at the top will be forced to go down and the economy they are very disturbed so the biggest threat is when bitcoin peaks there will definitely be a very sharp derivative, it will greatly affect the financial system

[jellylily]

Bitcoin is independent of the market and has nothing to do with the real economy. A well-known investor believes that Bitcoin is a "limited edition digital cultural relic". It is a cultural relics market and has nothing to do with other financial markets. It is a group of cultural relics lovers. Pleasure trading, "I do not deny that this matter itself is a market that will continue to exist, but now it has nothing to do with our real life." How can an item that has nothing to do with our lives lead to a financial crisis? ? All in all, Bitcoin is that people think that he is valuable and he is valuable. When people think that he is worthless, he will be useless. The financial crisis caused by the Bitcoin crash can be said to be very unlikely!

[Tristan Bieber]

Not that the entire blockchain will be packaged and added together. There is no other reason, the magnitude is not enough. In addition, the blockchain as a whole is also a relatively isolated market, and has nothing to do with other financial markets. In the future, no matter how high the market value is, it will be difficult for an isolated market to cause turbulence in the entire financial system. If it is related to the bank securities system in the future, it is hard to say.

[jaysabi]

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?

The thing that caused the housing bust and the dotcom bust was reckless buying, not new financial products.  So in that regard, bitcoin certainly looks like it is subject to reckless buying quite frequently, which is why you have these sharp contractions.  As for causing a financial crisis, no, I don't think so.  It's not nearly big enough or tied into the financial system in a significant way to cause a financial crisis.  Bitcoin could go to zero without much significant consequence for the overall financial system.

[Darker45]

It may or may not happen, but definitely not now nor the next year or two. The crypto market is still a small market. Considering that it is global in scope and that it is made up of thousands of different projects, a trillion market cap is still considered low. Who are the players in the Bitcoin market, for example? There are a few institutions, huge names in finance, some in technology, and the rest are retail investors. I don't know how it could trigger a financial crisis. Perhaps in the decades to come when the market cap is already reaching hundreds of trillions.

[Jawhead999]

You need to know first how much Bitcoin total market capitalization between all fiats exist in this world, based on this site Bitcoin market capitalization dominance is only 0.53 % [1] not even enough to reach 1% right now. It's really small and doesn't affect majority of people, if Bitcoin dominance is already 20-30% of course people will panic and could face financial crisis.

Bitcoin crash is a temporary financial crisis for those people who buy Bitcoin on the peak before
[1] https://fiatmarketcap.com/

[Xinarae*]

The crypto market has improved a lot through blockchain technology to is difficult to say whether crypto will lead to the next financial crisis but the future of crypto is much better because of the rate at which millions of dollars are being invested in the crypto market even if the prices of currencies fall if the amount of investment increases the market will rise again. Just as banks cannot create virtual currencies it prohibits the creation of any money other than blockchain programmed and slow crypto will go a long way in terms of technology.

[tyz]

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?

No, there will be a financial crash sooner or later. However, this crash will not be triggered by Bitcoin, but by irresponsible financial policies of many governments and central banks worldwide. Bitcoin and Co. will then be a safe haven for ordinary people, just as Satoshi once intended.

[eaLiTy]

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 is true that we had many narratives whenever there was a global economic crisis and it happens whenever the market reaches a point of speculation that would rally without making much sense and eventually it will lead the market to fall unconditionally and hopefully we will not see that situation here.

We are already struggling with the pandemic situation and many countries are printing more money and pumping in the market and it might create an issue in the coming years and we might even see inflation in the market and if everything aligns in the same path we might see another crisis.

[noorammak]

The cryptocurrency market capitalization is very small compared to the rest of the economy so it will not be able to affect the overall economy. Throughout the world's economic history, recessions have come from holes. Cryptocurrencies look very bright, transparent so I think crypto is the solution to the economy instead of seeing it as a risk.

[BrewMaster]

the financial crisis and the economy tanking like in 2008 didn't happen because some market crashed. it happened and always happens because someone is fucking up the economy like the corrupt banking system that has deep roots in all aspects of economy and our day to day finances.

crypto market on the other hand is a tiny thing that people can go to and trade a little bit which won't change anything in the world if it were to shut down tomorrow.

[stompix]

At current levels?
Crypto could be gone by tomorrow and the world economy will not even cough!

We just had 50% of the so-called market cap erased in a month, did it matter to the rest of the economy? Not even a wink, the stock market is still going up, commerce is at fulls team, everyone is buying stuff and looking for even more stuff to buy as manufactures are not meeting demand. What would a 90% crash from the price now do that the 50% has not, especially since there will be even less value at stake here?

No matter how many try to picture the crypto world as something that entire nations and economies depend upon in reality is just a drop in the ocean, bitcoin still has a tremendous road ahead before it becomes something that can rock economies and force policy makers to take to account. Like it or now we're still in the era where one tweet can erase hundred of billions, and this not coming from a government but from just one person.

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.

Living a facial crisis? Where? I'm not saying we're not going to end up in one sometimes down the road, but where do you see that financial crisis right now?
And I'm not talking about Venezuela and Iran!

[jossiel]

It is a fact that we see manipulation in the market but that has been seen a years ago and it will remain for the next years to come. The correction that we're getting is also essential for the market to be balanced.

I don't see the next financial crisis happening because what just happened last year was already enough for a financial reset worldwide due to  the pandemic. If you've seen those countries printed new supply of cash in their economy, that's already the sign of it but most of them are recovering.

[Poker Player]

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 are posing an interesting question, OP. I've reported your post history, which I think is decent, to see if some merit source gives you at least one merit (have a look at the thread, you can do the same in the future).

Regarding your question, I am not clear, but sometimes I doubt it. I don't like Saylor's emphasis on borrowing, as I wrote in another post.

I think this can lead to too much unhealthy debt in the crytpo space and we know how debt bubbles end.

At current levels?

You are right, not at current levels but let's think of BTC eating most of gold market cap, and then keeping growing. I think we would be entering a dangerous zone then if too much debt was used.

[jaberwock]

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 certainly will have a part in it and that's for sure. Why is there financial crisis? Because everyone loses money all together, when a big enough population loses money all together and lose tens of billions of dollars together then that's called a financial crisis. When the banks gone down in 2008 that was a bad situation and I understand why people assumed it would be similar in crypto as well, everyone was having mortgages and loans and stock investments and so forth in 2008 and when things went down and market crashed people lost tens of billions of dollars combined.

It means bitcoin is big enough already but it is not wide enough, there is ton of money involved but not as many people as one whole nations stock owner count, in usa there are more stock owners than crypto owners I assume (no idea if that's true) eventually I am sure when bitcoin reaches over 10 trillion dollars we will see crypto crash causing financial crisis as well if you ask me.

[AndySt]

the financial crisis and the economy tanking like in 2008 didn't happen because some market crashed. it happened and always happens because someone is fucking up the economy like the corrupt banking system that has deep roots in all aspects of economy and our day to day finances.
crypto market on the other hand is a tiny thing that people can go to and trade a little bit which won't change anything in the world if it were to shut down tomorrow.

Financial crises and overproduction crises are a given and a feature of the capitalist system of the economy and to overcome this, something more is needed than the absence of corruption in the banking system and in public administration in the economy. We also need perfect and immaculate angels who participate in all this and make all their decisions for the universal and all-encompassing good Well, I hope you understand me and take off your rose-colored glasses, which distort the harsh reality. The crisis of 2008, like other similar crises, already had a lot of causes and prerequisites, and thanks to what random event it would all happen was only a matter of time and place.

[Tristan Bieber]

Block currency may replace the current legal currency, but it will not be Bitcoin.

Even if it is assumed that a Bitcoin is the only currency, other aspects are exactly the same as the current world. Theoretically, its economic impact will be similar to the large fluctuations in the years when the gold standard was implemented.

However, the fact is that countries will quickly fork Bitcoin, and then implement currency supply policies that are compatible with their own economic conditions. Therefore, there will be no significant impact.

Because of the existence of the fork, the total amount of Bitcoin is arbitrarily unlimited. Once there is a shortage of supply and the price soars, there will be groups immediately to fork and issue them. There is no deflation, only severe inflation.

[Kittygalore]

The cryptocurrency market capitalization is very small compared to the rest of the economy so it will not be able to affect the overall economy. Throughout the world's economic history, recessions have come from holes. Cryptocurrencies look very bright, transparent so I think crypto is the solution to the economy instead of seeing it as a risk.

I don't think transparent is the right word to associate with crypto since it is in the namesake which is cryptography. It might not affect but the waves that it will make in the long-term is going to be sending tremors to financial institutions around the world, as people are getting their freedom with the help of cryptocurrency, they will start to get more independent and bankers don't like independence.

[noorammak]

The cryptocurrency market capitalization is very small compared to the rest of the economy so it will not be able to affect the overall economy. Throughout the world's economic history, recessions have come from holes. Cryptocurrencies look very bright, transparent so I think crypto is the solution to the economy instead of seeing it as a risk.

I don't think transparent is the right word to associate with crypto since it is in the namesake which is cryptography. It might not affect but the waves that it will make in the long-term is going to be sending tremors to financial institutions around the world, as people are getting their freedom with the help of cryptocurrency, they will start to get more independent and bankers don't like independence.

Except for the anonymous coins, the cryptocurrencies that we frequently use can view the transactions publicly, in addition, the source code of the projects is open so I call it transparent.
Banks don't like cryptocurrencies as governments do so they already have crypto-specific regulations in place in some countries.

[Roy Asher]

It will not cause a financial crisis. After all, the size of Bitcoin is very small, and it is a small investment product, which will not affect the economy and finance, because Bitcoin is insignificant for the economy and finance. At present, there are also some companies investing in Bitcoin. When Bitcoin plummets, there will be some losses for the company, but it will not have any major impact on the economy.