The International Monetary Fund’s (IMF) ‘World Economic Outlook Update: Gloomy and More Uncertain’ July 2022 report is out. It interestingly states that the recent Bitcoin (BTC) crash, amid a ‘dramatic’ crypto sell-off, didn’t actually lead to a spillover effect ‘so far’ on the global financial system.
“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 IMF states in its latest report.
Bitcoin, currently trading at $21,355, per CoinMarketCap, was 5% down yesterday at $20,811, reports indicate. This pricing is a 70% downward spiral of the largest cryptocurrency’s market cap after a November high of $69,000.
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The IMF, in general, deems Bitcoin and other digital currencies as risky assets.
Owing to the Russia-Ukraine war impact on global supply chains, investors, on a priority basis, did a massive sell-off. The crypto market further went downhill as the TerraUSD “algorithmic stablecoin” depegged, irking bankers and investors globally.
Institutions such as the Bank of England and the Federal Reserve are ever since asking for better regulations for stablecoins. Lael Brainard, Vice-Chair, Federal Reserve says, the fall of Terra is “reminiscent of classic runs throughout history.”
