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Ken Brown, Finance Editor… “information”The current cryptocurrency winter may be harsher than before due to the growing connections between digital markets and traditional financial systems.
He said in a recent interview that cryptocurrencies are more connected to the traditional financial system than ever before, noting that this interconnectedness exacerbates risks during recessions.
Brown explained that the current wave of sharp selling is similar to what happened after the FTX crash, where speculative assets fell sharply after a boom period of exaggerated gains.
He also pointed out that companies such as “MicroStrategy” purchased Bitcoin in large quantities during the bull market, causing the price to rise, and later causing the decline to expand as the momentum weakened.
He noted that widespread reliance on stable currencies adds a new dimension of risk, particularly in countries with volatile currencies.
He cited the collapse of Silicon Valley bank Circle (the issuer of USDC), which held billions of dollars in deposits, to illustrate how problems in the banking industry can affect the stablecoin market.
Considering the interconnectedness between cryptocurrencies, stocks, stablecoins, and other financial products, Brown described the current situation as a new winter.
He believes what is happening now is an important test of how digital markets interact with the global financial system, adding that regulators are watching developments closely.
Also read:
Withdrawal of 580,000 Bitcoins in just 6 days: Is the market about to usher in a great leap forward?
Cryptocurrency market adds $130 billion after Bitcoin rises to weekly high above $91,000
