"And it's only $880 billion before the correction, which is a big nothing burger," continued O'Leary.īy way of comparison, BlackRock has $10 trillion in assets under management, and the market value of the four most valuable tech companies - even after this year's correction - is still over $5 trillion. "If bitcoin went down another 20%, it wouldn't really matter because it's spread around everywhere." It's not just the American investor exposed," he said. "The great news about the crypto economy and even positions like bitcoin or ethereum, these are decentralized holdings. O'Leary, who has said that 20% of his portfolio is in crypto, also makes the point that these losses are spread out worldwide. The firm expects the drag on aggregate spending from the recent price declines to "be very small." households.Īccording to a note from Goldman Sachs in May, crypto holdings comprise only 0.3% of household worth in the U.S., compared with 33% tied up in equities. Even though some retail traders have been battered by the recent stretch of liquidations, overall losses in the crypto market are small relative to the $150 trillion net worth of U.S. "I don't think we've seen the sort of exposure to that that we've seen in other financial crises," he said.Įxperts tell CNBC that the exposure of everyday mom and pop investors in the U.S. "There's certainly been banks and other financial institutions, which have expressed interest in crypto as an asset and as an asset that they might like their customers to also be able to invest in, but in reality, there isn't that much of that investment going on," explained Gans, noting that banks have their own set of regulations and their own need to make sure that things are appropriate investments. Gans agrees, telling CNBC that he doubts banks are all that exposed to the crypto sell-off. dollar banking system, therefore, "may be limited."įor all the enthusiasm for bitcoin and other cryptocurrencies, venture capitalist and celebrity investor Kevin O'Leary points out that most digital asset holdings are not institutional. ![]() The spillover risks from tanking crypto prices to the broader fiat U.S. There are exceptions - MicroStrategy took out a $205 million bitcoin-backed loan in March with the crypto-focused bank Silvergate - but for the most part, crypto-backed loans exist within an industry-specific echo chamber.Īccording to a recent research note from Morgan Stanley, crypto lenders have mostly been loaning to crypto investors and companies. "People have used cryptocurrency to borrow for other cryptocurrency, but that's sort of contained in the crypto world." ![]() Gans says that's a big part of why the crypto market is still more of a "side show" for the economy. So this is low on the list of issues for the economy," said Joshua Gans, an economist at the University of Toronto. Without that, this is just a lot of paper losses. "People don't really use crypto as collateral for real-world debts. economy for one big reason: Crypto is not tied to debt. ![]() That said, economists and bankers tell CNBC they aren't worried about a knock-on effect from crypto to the broader U.S. It may be among the smaller asset classes, but the buzzy industry commands a lot of attention in popular culture, with ads on major sporting championships and stadium sponsorships. ![]() Then there's the whole mystique around the nascent crypto sector. So there is some degree of national exposure to the deep-sell off in the crypto market. adults said they had invested in, traded, or used a cryptocurrency. households own one-third of the global crypto market, according to estimates from Goldman Sachs, and a Pew Research Center survey also found that 16% of U.S. The crypto market's sub $1 trillion market cap (which is less than half that of Apple 's) is tiny compared to the country's $21 trillion GDP or $43 trillion housing market. Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit
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