These are heady times for the blockchain and crypto sector.
In the first half of 2024, spot Bitcoin ETFs debuted on Wall Street, a major U.S. presidential candidate came out in favor of cryptocurrencies, and BTC experienced its fourth quadrennial “halving” and reached new market highs.
Moreover, Ether — the world’s second-largest cryptocurrency — stands on the verge of another milestone, with an Ether ETF potentially launching in the U.S. as early as July 8.
But crypto doesn’t exist in a vacuum, and the outside world has become a less secure place, wracked by several major wars, extreme weather events and persistent monetary inflation.
Given the circumstances, a cross-border meltdown in the traditional financial system by year’s end isn’t unthinkable.
So, it bears asking: If a TradFi crisis does materialize, what becomes of the latest crypto bull run?
TradFi upheaval “cannot be ruled out”
“It’s definitely possible that major corrections in financial markets will happen before the end of the year, although they might not lead to a full-blown crisis,” Paolo Tasca, an economist and founder of the University College London Centre for Blockchain Technologies, tells Magazine.
The trigger? Probably a correction in AI stocks, “but the main market to look at is debt, in my opinion,” says Tasca. The U.S. has been running massive fiscal deficits, which may make interest rate cuts unlikely, and as a result, the bond and equity markets could “suffer from the continued restrictive monetary policy.”
Ongoing inflation, geopolitical tensions, as well as “the speculative nature of certain asset bubbles, including those in the tech and AI sectors,” are potential catalysts, adds Yu Xiong, a professor and director of the Surrey Academy for Blockchain and Metaverse Applications at the Surrey Business School. Xiong tells Magazine that “a global financial crisis in 2024 cannot be ruled out.”
Elsewhere, global equity prices remain high as measured by the Shiller ratio,…
..
