Is the #CryptoThreat to U.S. #FinancialStability $889 Billion or $10 Trillion? https://t.co/CgN3tU8IGJ
— Guillermo Ruiz Zapatero (@ruiz_zapatero) June 23, 2022
It is important to note the entire cryptocurrency market cap is $889.25 billion versus the American GDP, which is $25.34 trillion and an equities market more than $49 trillion
Powell responded that the Fed was watching those events “very carefully” but the Fed “did not see significant macro-economic implications.” The article goes on to lend credence to this observation from the Fed by noting the following:
“It is important to note the entire cryptocurrency market cap is $889.25 billion versus the American GDP, which is $25.34 trillion, and an equities market that controls more than $49 trillion.”
So exactly how big is the problem? The $889.25 billion market cap for crypto cited by Benzinga is a miniscule part of the problem. That’s just the market value of all of the crypto that trades. And it should be noted that the market cap of crypto stood at $2.7 trillion as of last November, so investors have already experienced a negative wealth effect of $1.8 trillion.
But what about all of the crypto mining stocks that went public and have now lost 70 to 90 percent of investors’ money? What about the loans taken out by the crypto mining companies to buy all of that energy-guzzling computer equipment? What about the billions of dollars in margin loans sitting at federally-insured banks that were made to hedge funds to leverage their crypto bets? What about the bank loans to venture capital firms to invest in hundreds of crypto startup firms?
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