‘Crypto sell-offs won’t affect the financial markets’- Here’s why
ambcrypto.comIn a report released on 26 July, the International Monetary Fund claimed that the Bitcoin [BTC] bear market has no bearing on the stability of the world’s financial system.
The IMF report “World Economic Outlook Update: Gloomy and More Uncertain” also noted that the cryptocurrency market has seen a “dramatic” sell-off. However, the much talked about sell-off hasn’t harmed the financial system.
This relative calm exists despite recent failures, such as those of the Three Arrows Capital fund and the TerraUSD stablecoin. However, the aforementioned failure did cause some regulators to want to take more control over the developing market.
<p lang=«en» dir=«ltr» xml:lang=«en»>After a tentative recovery in 2021, the economic outlook has turned gloomy and uncertain, with the probability of a global recession. The latest #WEO explains the reason behind the downgrade to our growth projections. https://t.co/ldMsaieJUU pic.twitter.com/PbpvScahsN— IMF (@IMFNews) July 26, 2022
At press time, Bitcoin was trading at $21,285.80. The largest cryptocurrency, by market capitalization, stood at a low of its 70% record high. However, the state of almost all other cryptocurrencies was also on a decline. Well, the 2022 sell-off has affected all tokens alike.
Investors are moving away from “risky” assets as a result of the uncertainty caused by the Russian invasion of Ukraine and supply chain problems. In this context, IMF stated,
“Crypto assets have experienced a dramatic sell-off that has led to large losses in crypto investment vehicles and caused the failure of algorithmic stablecoins and crypto hedge funds, but spillovers to the broader financial system have been limited so far,”
The body’s remark about an “algorithmic stablecoin” alluded to
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