The crypto collapse we’ve seen this year has the potential to cause a contagion event. It’s a poor asset class to have exposure in and just as we didn’t think 2008 could get as bad as 2001, the lesson is that it could actually get worse.
The US Fed’s decision to raise rates aggressively is having a cascading impact on markets. Tech layoffs are a sign that the economy we have in its current form is breaking. Real estate markets are in a freeze. People are starting to panic.
Bottom line: If the US Fed wanted to change risk dynamics and create caution, I believe they have done a good job. If crypto gets worse, we’ll see central banks move away from their inflation war towards a more diplomatic stance where they are again tempted to intervene to save the markets from contagion.
What happens in crypto could end up impacting everything. It’s a great time to be thinking about being contrarian. While everyone runs for the exit, the smart money will be looking to buy.
Market commentary and analysis from Peter Esho, economist and co-founder at Wealthi
