The cryptocurrency market has been on a dip since the beginning of the year, but the crash worsened recently when the price of Bitcoin dropped below $28,000. With the crash triggering fear and anxiety among investors, Goldman Sachs has said that the month-long crash would not affect the US economy.
Crypto crash will not affect the US economy
Economists from Goldman Sachs published a research note saying that the dip in the cryptocurrency market was “very small” compared to the economy’s total value. The global cryptocurrency market cap reached an all-time high of above $3 trillion in November last year, but the past seven months have been faced with slow performance.
However, Goldman Sachs economists have also noted the decline was small compared to the $150 trillion comprising the entire household networth. The crypto space made up a very small percentage of this network’s worth, and the crypto market decline will therefore cause a slight slump in value.
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The economists also said that around 0.3% of the household net worth was made up of crypto accounts, while equities comprised around 33%. Since the beginning of the year, Crypto markets have been down, but the stock market has also been recently hit.
In April, Netflix suffered a massive loss after dipping by 37% on the earnings report. It was also revealed that the company lost 200,000 subscribers during the first quarter of the year. Other tech giants such as Amazon, Microsoft, Tesla, and Alphabet have also recorded massive declines.
Equity markets drive the economy
Goldman Sachs also said that the “equity price fluctuations are the main driver of changes in household net worth, while cryptocurrencies are only a marginal contributor.” The report also added that the young demographic, which made up most of the cryptocurrency space, was not largely affected by changes in wealth.
Despite Goldman Sachs’s reassurances, many cryptocurrency investors have been hit hard by the Terra UST stablecoin and the LUNA token collapse. Both LUNA and UST have dropped to $0, and the crash caused increased volatility across the market.
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