The free fall in crypto markets could continue because of the system’s complexity, Deutsche Bank (DB) said in a report Wednesday.
Getting token prices to stabilize is difficult because there are no “common valuation models like those within the public equity system,” the bank said. In addition, the cryptocurrency market is highly fragmented, according to the report.
Furthermore, speculative trades are likely to involve the simultaneous use of several coins, which increases spillover effects, the bank said. Whatever liquidity might exist in these markets could quickly evaporate, which would erode confidence in prices and increase the likelihood of contagion, it added.
As bitcoin (BTC) and other cryptocurrencies are speculative, high-risk assets, they are “disproportionately affected by central bank tightening,” the report said.
The U.S. Federal Reserve is nowhere near finished with its tightening cycle, the European Central Bank (ECB) has “yet to lift off,” and the Bank of Japan...
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