Market might be on verge of crash as we see 2008 repeat
Black Swan potentially did not appear on the market after a series of discussions by the crypto and financial community about the worrying state of one of the world’s largest investment banks, Credit Suisse, could be dangerously close to default. And that could be a reason. Huge crash in the markets.
What’s happening?
The story began with ABC Australia’s post about a major financial bank being on the brink of a default. The news outlet has not pointed out which bank is in the state mentioned in the article, but financial experts and economists already had a suspect in mind.
Credit Suisse, one of the world’s largest investment banks with nearly $1.5 trillion in AUM, hasn’t been in the best shape over the past year. The bank’s stock fell more than 60% during the year, falling from nearly $10 to $3.95.
However, the poor performance on the market is not the only thing that causes issues. The cost of the bank’s credit default swaps has skyrocketed, reaching the highest level since the 2008 market catastrophe. The CDS is a popular instrument that acts as a hedge against a potential default.
How will this affect the crypto market?
It is no secret that bitcoin and other digital assets are largely tied to the performance of financial markets outside the blockchain world. The default of such a major bank would certainly cause turbulence in high-risk markets, which includes crypto.
Thankfully, over the last few weeks, we have been seeing a gradual decoupling of BTC against indexes like the S&P500, which could act in favor of blockchain-based assets in case of a major crash.
