Crypto crash stokes some financial crisis fears... What Would Mean For The U.S. Economy?

Crypto crash stokes some financial crisis fears... What Would Mean For The U.S. Economy?

The crypto market has shed almost $2 trillion in value, triggering some  concern it could hurt the larger economy. Experts aren't too worried ...  yet.

The crypto market has shed almost $2 trillion in value, triggering some  concern it could hurt the larger economy. Experts aren't too worried ...  yet.

The cryptocurrency market’s near-$2 trillion loss in value forces a  difficult question: Could crypto trigger a broader economic slowdown?

The cryptocurrency market’s near-$2 trillion loss in value forces a  difficult question: Could crypto trigger a broader economic slowdown?

It’s a concern that highlights the uncertainty inherent in a market that  by many measures is still in its infancy but is now mainstream enough  to inspire multiple Super Bowl ads and attention from mainstream  financial institutions. 

It’s a concern that highlights the uncertainty inherent in a market that  by many measures is still in its infancy but is now mainstream enough  to inspire multiple Super Bowl ads and attention from mainstream  financial institutions. 

Last month, Fidelity Investments, the nation’s  largest retirement plan provider, said it would allow people to put bitcoin in their 401(k) accounts, beginning this year.

Last month, Fidelity Investments, the nation’s  largest retirement plan provider, said it would allow people to put bitcoin in their 401(k) accounts, beginning this year.

The question also nods to the financial crisis that started in 2007,  when a drop in the housing market sent the U.S. into a deep recession  and briefly threatened the global financial system.

The question also nods to the financial crisis that started in 2007,  when a drop in the housing market sent the U.S. into a deep recession  and briefly threatened the global financial system.

While there’s plenty of reason for pessimism around the crypto market  and some of the more mainstream stock and bond markets, experts who  spoke with NBC News aren’t yet seeing signs of contagion from the crypto  dip that could infect the larger economy.

While there’s plenty of reason for pessimism around the crypto market  and some of the more mainstream stock and bond markets, experts who  spoke with NBC News aren’t yet seeing signs of contagion from the crypto  dip that could infect the larger economy.

“Cryptocurrency is not quite there as a collateralized thing,” Gans  said. “Could one of these banks have done something extremely stupid?  Sure, but it doesn’t look likely.”

“Cryptocurrency is not quite there as a collateralized thing,” Gans  said. “Could one of these banks have done something extremely stupid?  Sure, but it doesn’t look likely.”

Nonfungible tokens, or NFTs, took off last year as a way to invest in  digital art and collectibles, but in a sharp reversal, the number of  accounts actively buying and selling NFTs has declined by more than half this year, according to the analytics company Chainalysis.

Nonfungible tokens, or NFTs, took off last year as a way to invest in  digital art and collectibles, but in a sharp reversal, the number of  accounts actively buying and selling NFTs has declined by more than half this year, according to the analytics company Chainalysis.

The And then there are “stablecoins,” which also saw a surge in popularity  last year. Stablecoins are designed to have a consistent value, such as  $1, to facilitate trades and serve as a possible safe haven, and each  stablecoin such as luna (which crashed) or tether (which briefly dipped  below $1 last week) has a different, sometimes-elaborate process for  ensuring that the value stays pegged to that denomination.

The And then there are “stablecoins,” which also saw a surge in popularity  last year. Stablecoins are designed to have a consistent value, such as  $1, to facilitate trades and serve as a possible safe haven, and each  stablecoin such as luna (which crashed) or tether (which briefly dipped  below $1 last week) has a different, sometimes-elaborate process for  ensuring that the value stays pegged to that denomination.

“A lot of other projects will go bust as well. That’s what happens,”  Greenspan said. “We have to think about crypto projects in general as  startups. This is all very new. And startups in general have something  like a 95 percent fail rate.”

“A lot of other projects will go bust as well. That’s what happens,”  Greenspan said. “We have to think about crypto projects in general as  startups. This is all very new. And startups in general have something  like a 95 percent fail rate.”

“My guess is that it’s still contained as its own thing,” Gans said. “It  would spill over into the real economy if a whole lot of people had  been borrowing in order to do that, and it’s not always easy to see that  when times are good and prices are up.”

“My guess is that it’s still contained as its own thing,” Gans said. “It  would spill over into the real economy if a whole lot of people had  been borrowing in order to do that, and it’s not always easy to see that  when times are good and prices are up.”

Cryptocurrency Update