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‘Bitcoin Froth’ Will Spill Over Into Stocks And Beware The ‘Crypto Winter’
Three weeks ago, Deutsche Bank's Torsten Slok sent the following list (which documents 30 risks to markets in 2018) to clients:
Coming in at number 13 (appropriately enough), is "Bitcoin crash, confidence impact on retail investors."
On its face, that might seem absurd, but we think it has some merit. Cryptocurrencies are rapidly going mainstream and the launch of Bitcoin futures on the Cboe and CME along with Goldman's apparently imminent move into crypto market making suggest integration
The excitement around bitcoin is starting to feel eerily similar to the beanie baby craze in the late 1990s. Perhaps we’re seeing market froth spilling over into other speculative assets as we approach the final stages of the business cycle. As the beanie baby crash preceded the dot com crash, maybe a bitcoin crash will precede the next downturn in the stock market. It could be that these phenomena are simply a reflection of exuberant investor sentiment as we approach the top of the market.
Eerily similar to the beanie baby craze … seriously? I don’t recall the JP Morgan CEO dismissing beanie babies with derision and contempt …
On a separate note … number 10 on the list has been raging on for at least a couple of years now … apparently to no effect …