Yesterday there were amazing report about a man, who had never flown an airplane managing to successfully land the plane as the pilot had passed out…he had plenty of support and plenty of runway.
It seems that both support and runway are running on low for the crypto industry.
From a peak above $68,000 in the bitcoin price the tide has turned into a flood, in part because of cracks in the so-called stablecoins – a misnomer if ever there was one – that glue the market together.
Right now the price is down to around $27,000. It is entirely plausible that the market can recover from this, just as it has done from numerous previous challenging episodes.
Say what you like about crypto, it has a dedicated fan base and impressive staying power. But anyone who got in after the end of 2020 is now under water and the drivers of this decline seem structural.
So, who cares?
Well, it is sad for the people, often young and with meagre means, who ignored all the warnings and put their life savings into shiny crypto coins, lured in by claims that these lines of code could become serious rivals to the dollar and the basis of a new financial utopia.
It is awkward for the boosters who tried to convince institutional investors that bitcoin is a hedge against inflation, which it plainly is not.
El Salvador’s crypto fanatic president, Nayib Bukele, may need to downgrade his grand plans for Bitcoin City to Bitcoin Town.
The open question is whether it all matters for traditional markets, which are already suffering a wobble of their own. Will it move stocks and bonds?
Typically, what happens in crypto stays in crypto. But big moves can cut through.
A regulatory crackdown from China almost exactly a year ago sparked a fleeting 30% crash in the price of bitcoin and left German government bond watchers bemused to see their market pick up on a flight to safety.
Hedge fund clients are watching closely now, with several taking seriously the possibility that a big crash in crypto, if it happens, could be supportive for that most crucial of markets, US government bonds, again on the notion that it would spark a rush to safer places to park cash.
So the question is whether we are heading for a rerun of the 30% crash last year. Signs that tether is under strain add to the sense that this decline in price could be The Big One.
The stablecoin, which operates almost like a central bank for the crypto market, has seen cracks emerge in its dollar peg after a much smaller stablecoin, TerraUSD, went into meltdown earlier in the week.
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