Will crypto lead to the next financial crisis?

[King Khaizan]

According to economic historian from the University of Cambridge, Garrick Hileman, said cryptocurrencies triggered the trigger for the financial crisis. Hileman said the growing number of financial institutions interested in cryptocurrencies created a rapid increase of "systematic importance" giving rise to "systematic risk".

Hileman said this at the end of 2017 to Business Insider, at that time the price of bitcoin was still around US $ 19,000/BTC.

At that time, Hileman said that if there was a crash in the financial market, bitcoin and cryptocurrencies would be more widely accepted. The prediction is accurate, global financial markets experienced turmoil in March 2020 when the corona virus was declared a global pandemic. Since then more and more financial institutions to large companies are investing in bitcoin, the price continues to skyrocket.

In 2017, the price of bitcoin skyrocketed 2000%, to close to US$ 20,000/BTC. At that time, economists in a survey said bitcoin did not have the risk of triggering a crisis, because of its small market capitalization and separate from other financial markets.

The current market capitalization of bitcoin and all cryptocurrencies has certainly multiplied, because the price has moved in the range of US$ 60,000/BTC. Based on Coin Market Cap data, bitcoin's market capitalization is currently US$1.1 trillion.

In comparison, Morgan Stanley Wealth Management, which provides bitcoin access services, has AUM (asset under management) assets of US$ 1.24 trillion as of June 30, 2020, based on data from ADV Rating.

This means that the current bitcoin market capitalization is still under AUM Morgan Stanley Wealth Management.

Meanwhile, the market capitalization of all cryptocurrencies is currently US$1.81 trillion. This market capitalization is also lower than USB Wealth Management's AUM of US$ 2.6 trillion as of June 30, 2020.

The market capitalization of all cryptocurrencies is also much lower than gold which is around US$ 11 trillion.

Even if it is considered that bitcoin's market capitalization is still not large enough to trigger a crisis, Hileman said the integration of traditional financial markets is starting to happen and very quickly. Thus, cryptocurrencies will not only threaten, but could "exacerbate" the crisis if it happens again.

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[Ryder Kudrow]

The economic crisis cannot be caused by Bitcoin, but the inevitable result of the current debt inflation in the legal currency system. The scale of Bitcoin is small, and its market value is not large enough to have a significant impact on the global financial system and pose any threat to it.
The collapse of cryptocurrency may cause serious economic losses to many investors, but it will not have a great impact on the financial system and will not affect the turbulence of the world economy.

[fulcare]

That is a one-sided point of view in my opinion. Yes the cryptocurrency space shows that people desire for something that is different from what they are used to, which is first and foremost something that does not support quantitative easing and also raises capital mobility on the individual level, but we shouldn't forget that we are also all better off if we do indeed have some tools in place to get fraud under control as much as possible without sacrificing freedom at the individual level. I know that is a dilemma and it can never really be fully controlled for, but it is in our best interest to find the sweet spot. Crypto has its own set of problems that needs to be addressed.

The financial crisis does not always bring positive changes, for example in my country.  The crisis in 1997 has saddened us to this day, the exchange rate of the Rupiah which was stable against the Dollar is now very low when compared to the Dollar.  The hereditary state debt has become the biggest burden to date.  However, currently crypto does not provide the alleged crisis potential because crypto does not use a qe policy.  Everything is left to the market and if banks adopt crypto then people will realize that there is no need for a central bank anymore.  Because the whole economic system is rotten today is the central bank everywhere.  They are regulators as well as creators of chaos in the economy.

We will never have a sound financial system, we can only thrive for a system that is less rotten than the last one. That is similar to what Musk said: Whether Bitcoin is the perfect solution that we are looking for to become a global currency. He answered no, Bitcoin is just less bad than fiat. I think I see some truth in that. Bitcoin will also be far from perfect because there is no perfection. Whenever it is about money, you will see powerful actors try to get control over it. This time it is just much more difficult as Bitcoin is way more resilient to power-drive attacks due to its decentralized nature and its incentive system.

[fuguebtc]

The growth of crypto is something to celebrate But the impact of crypto on the world economy is negligible. Compared to other industries, crypto is still very young and small. At the moment, cryptocurrency is probably the place where some people can avoid the economic crisis caused by the covid pandemic.

[Zam.io]

I always watched financial crises as a time of change! Yes, many big ones fall down, some new arise... while ordinary people suffer in that game of power! Usually the ones at the end of the food chain!
I believe that crypto is a new player in that game! The true power of crypto are people behind, there is a strong/rich group of people who stand behind the fiat/monetary systems around the world! We saw many little battles between crypto and government/bank sectors from different countries and looks like crypto is winning, simply because more people are joining, disappointed in traditional institutions!
It will be interesting to see what will happen, I expect some bigger battles in the future! More organized and widespread, probably after some big disaster, like it always happen!

I agree with your words that crisis is a time of changes.
In my opinion bitcoin and the whole crypto thing shows how it can be - open market for everyone anonymously with no credit ranks. Crypto market is a surgery tool, that shows us how a rotten system we have. And yes, it can lead to mass disappointment in the old markets and therefore results to financial crisis on these markets.

Government and central banks denyed crypto at first,
then they started to launch own crypto products
Because they know, if changes dont come from reforms, they come from revolution. So central authorities are afraid of this foreseeable financial revolution

That is a one-sided point of view in my opinion. Yes the cryptocurrency space shows that people desire for something that is different from what they are used to, which is first and foremost something that does not support quantitative easing and also raises capital mobility on the individual level, but we shouldn't forget that we are also all better off if we do indeed have some tools in place to get fraud under control as much as possible without sacrificing freedom at the individual level. I know that is a dilemma and it can never really be fully controlled for, but it is in our best interest to find the sweet spot. Crypto has its own set of problems that needs to be addressed.

I understand you
There are no only good things and only bad, they are all grey until you use it for the benefit of humanity.
Many people exploit crypto sphere in the aim to achieve fast financial success after holding several ICO and do nothing useful for market and society
It is very pitty that the most people still have no idea how to live this live. The answer is pretty simple: live in accordance with your brains and heart. All things and processes in the world will be nice and there will be no crimes, if only more then 51% of Earth population live their life in environmentally friendly way

So i just want to say that crypto and blockchain as a tools can avoid poorness in good and strong hands.
But in bad weak vicious  hands it will be scam after scam with no adoption for the world' benefit

[Zam.io]

According to economic historian from the University of Cambridge, Garrick Hileman, said cryptocurrencies triggered the trigger for the financial crisis. Hileman said the growing number of financial institutions interested in cryptocurrencies created a rapid increase of "systematic importance" giving rise to "systematic risk".

Hileman said this at the end of 2017 to Business Insider, at that time the price of bitcoin was still around US $ 19,000/BTC.

At that time, Hileman said that if there was a crash in the financial market, bitcoin and cryptocurrencies would be more widely accepted. The prediction is accurate, global financial markets experienced turmoil in March 2020 when the corona virus was declared a global pandemic. Since then more and more financial institutions to large companies are investing in bitcoin, the price continues to skyrocket.

In 2017, the price of bitcoin skyrocketed 2000%, to close to US$ 20,000/BTC. At that time, economists in a survey said bitcoin did not have the risk of triggering a crisis, because of its small market capitalization and separate from other financial markets.

The current market capitalization of bitcoin and all cryptocurrencies has certainly multiplied, because the price has moved in the range of US$ 60,000/BTC. Based on Coin Market Cap data, bitcoin's market capitalization is currently US$1.1 trillion.

In comparison, Morgan Stanley Wealth Management, which provides bitcoin access services, has AUM (asset under management) assets of US$ 1.24 trillion as of June 30, 2020, based on data from ADV Rating.

This means that the current bitcoin market capitalization is still under AUM Morgan Stanley Wealth Management.

Meanwhile, the market capitalization of all cryptocurrencies is currently US$1.81 trillion. This market capitalization is also lower than USB Wealth Management's AUM of US$ 2.6 trillion as of June 30, 2020.

The market capitalization of all cryptocurrencies is also much lower than gold which is around US$ 11 trillion.

Even if it is considered that bitcoin's market capitalization is still not large enough to trigger a crisis, Hileman said the integration of traditional financial markets is starting to happen and very quickly. Thus, cryptocurrencies will not only threaten, but could "exacerbate" the crisis if it happens again.

The crisis occurred due to a lack of assets backing and also because of human greed.

These two factors can be controlled using blockchain, smart contracts and oracles. If the security of all issued loans, all issued shares and tokens, all the cash flows of companies and defi projects were available online on some analytics board, then it would be difficult to overestimate them and then drop the price. After all, everything is visible and understandable

[bengsabeng]

The growth of crypto is something to celebrate But the impact of crypto on the world economy is negligible. Compared to other industries, crypto is still very young and small. At the moment, cryptocurrency is probably the place where some people can avoid the economic crisis caused by the covid pandemic.

Many people are starting to invest in crypto because of the faster growth in value than other investments. This pandemic made most people realize that investment is very important. This pandemic has made a lot of people out of work, people who invested in the past are very lucky because the investment really helped them in difficult circumstances like this.

[Wawa2013]

The growth of crypto is something to celebrate But the impact of crypto on the world economy is negligible. Compared to other industries, crypto is still very young and small. At the moment, cryptocurrency is probably the place where some people can avoid the economic crisis caused by the covid pandemic.

Many people are starting to invest in crypto because of the faster growth in value than other investments. This pandemic made most people realize that investment is very important. This pandemic has made a lot of people out of work, people who invested in the past are very lucky because the investment really helped them in difficult circumstances like this.

I agree that this pandemic has made everyone aware of the importance of investing, so for those who have not invested in any assets. Now is the right
time to start investing in crypto, why am I saying that, because crypto's performance is the best compared to other assets in a pandemic situation
like now. Even many people become rich after investing in crypto, but need to learn first about how crypto works, that way we will better understand
how to make a profit from cryptocurrency.

[juliepower]

 A cryptocurrency crash will lead to significant financial repercussions or even the next financial crisis. The future of cryptocurrency is bright as a lot of developments. cryptocurrencies are leading to systemic risk adoption and never ending supply.

[Gyfts]

The financial institutions that run the world are not heavily invested in crypto enough where a bubble burst would set them back.

What's going on in China is a crash after the nonpayment on billions in liabilities, and what happened with the housing market crash in the US was a bubble artificially created by banks handing out loans like candy.

Crypto doesn't necessarily have these issues because of the limit of supply. That's not to say if at some point the world was so heavily involved in crypto that a bubble burst could potentially cause strain, but the likelihood of that is small.

[Spack17]

I don't think that cryptocurrencies will be the reason to cause a financial crisis in the future. The main reason could be that FED's continually printing money even without caring about it for example. It is not good to print more money than needed. This will cause your currency to devaluate and it may even lead your country to enter a bad economic condition also at some point.

[V-t.Ester]

Not crypto leads to the financial crisis (BTC has a fixed limit of 21 million coins, so it can't hyperinflate.) but inflation.  The Federal Reserve is printing more and more dollars every day. They’ve printed 10 Trillions of dollars during the past 2020 year or $27 Billion daily ( https://demonocracy.info/infographics/usa/us_stimulus_package_10_trillion_2020/us_stimulus_package_10_trillion.html ). So the inflation rate will run hotter than previously and it's only a matter of time when this will lead to financial crisis.  

[nur rochid]

I don't think that cryptocurrencies will be the reason to cause a financial crisis in the future. The main reason could be that FED's continually printing money even without caring about it for example. It is not good to print more money than needed. This will cause your currency to devaluate and it may even lead your country to enter a bad economic condition also at some point.

Cryptocurrencies with a limited and transparent supply are different from fiat currencies, which have unlimited supply, so inflation occurs every year. if this continues, the intrinsic value of fiat currencies will continue to decline, and this could trigger a crisis. but maybe that's when crypto has a chance to have a hand in it

[Levero]

Cryptocurrency will not cause a financial crisis. The previous financial crisis was caused by the improper operation of the banking system rather than the collapse of the crypto market.

Cryptocurrency accounts for a small proportion in the world's financial system, and its market value is relatively small, and it will not have a particularly large impact on the financial system.

[Rufsilf]

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?

Crpytocurrency will not lead to a global financial crisis because most of the banks doesn't adopt crypto transactions or even the big names and brands of food, clothing, medical and etc. Crypto is just a small scale compared to other leading reasons that can somehow lead a financial crisis. Even if we combine the top 10 coins in the market, still it cannot shake the entire country nor world to cause a financial crisis.

Cryptocurrency are their to help the human race just like bitcoin was created on 2009 after the financial crisis on 2008.

emember why bitcoin was

[CaptainCrapper]

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.

When Top county accept 1/2 then all the middle country accept it and then we can get proper news from other so we have to wait to see very good something.

[verita1]

Cryptocurrencies will not lead to the next financial crisis. On the contrary, they will help prevent it from happening. We have just seen the case of the bankruptcy of evergrande, bitcoin and the crypto market felt it, overcame it and there we are still immune.

I always have the conviction that bitcoin and cryptocurrencies will solve the economic problems that nations are experiencing.

In the Latin American region they are following in the footsteps of El Salvador, it is only a matter of time before all countries embrace bitcoin.

[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?

I don't think that there is a lot risk coming from crypto currencies to be the root of evil of the next financial crisis. We have been in a zero interest rate world for more than 10 years already. This interest rate makes loans so cheap which is making huge messes in the financial world. Everybody can get a loan for almost free right now which made real estate very expensive. Buying an apartment or house right now will put us in debt for the next 30 years. I think we will see another crash in the real estate bubble.

As of now there isn't even a slight chance for cryptocurrencies to become the root of evil for the next financial crisis. Maybe if the overall market capitalization of all cryptocurrencies is above $5 trillion, we might slowly perceive cryptocurrencies and a potential massive crash as a systemic risk. Right now cryptocurrencies can't really do much in terms of initiating a financial crisis. Other markets are way bigger, riskier and way more dangerous to global financial stability. Just look at the housing market and the price explosion in real estate facilitated with newly printed money. Bubble?

The way the financial systems are linked and the massive use of leverage, small problems can quickly snowball and become systemic.  That's why you're seeing Janet Yellen start to talk about the risk posed by cryptocurrency because it's completely unregulated and operates in the dark.  Nobody knows if or how big of a problem crypto could spark, and that's a problem.

There is some truth to what you are saying, but there is also a difference between fiat money where you can create 9 dollars of inexistent credit money for every 1 dollar deposited in a bank account and cryptocurrencies where a bitcoin is a bitcoin, no matter what. You can trade crypto with leverage here and there, but you can't create a legal bubble like you can with fiat. What you can do is pump up bitcoin with printed Tether, but that can't be legal unless there is a real dollar (which in essence is a fake dollar) for every single USDT printed on the blockchain.

It's not "inexistent credit money."  The vast majority of loans in the fractional reserve system are productive loans, meaning they're made to support new economic activity.  As long as that's the case, the new economic activity created by the loaned dollars justifies the expansion of the money supply.  This is why the system works.  If it didn't work, we would see constant bank failures and the system would have collapsed long ago.  But it endures because it works.  The criticisms against it you levied are common among people who don't understand it.

[Mauser]

I don't think that crypto currencies are going to be part of the next big financial crisis. There are two big areas which worry me and they are independent of cryptos. The first alarming area is the ever rising debt levels in the world. Most of the western countries run a deficit and there is no end insight. Costs and spending are rising faster than the economic growth and if we include the demographic change than rfe future is not looking good. And the second big area to worry about is ever rising real estate prices. Interest rates are so low that taking out loans is the only chance to buy an apartment. But real estate price never rose forever in the past. There has to be a correction eventually which will turn all these loans bad. In my opinion the next crisis will either be a sovereign or a real estate crisis.

[Wakate]

Why would it lead to? It's making everyone some money but at the same time it also makes people stay inside instead of coming back to the mainstream fiat based economy so I don't see how it's going to be that way for cryptocurrencies to cause a crisis, on the other hand, I think that we should look out for constant money injection in the economy through stimulus checks because they will cause hyperinflation.

There will be no effect for now but I know as time goes on, the world government will have to scrap the idea of different currencies majorly the Fiat then the adoption of cryptocurrency in making payments and transactions will come in and there will be no need for the use of Fiat. The world system of Fiat as a form of money will soon end and I bet everyone to prepare for the new change of crypto system of money transactions.