Bitcoin a Risk to Financial Markets?
Everyone will be wondering how bitcoin would perform in the new year to come, and how it would affect the financial markets. There has been endless debates whether cryptocurrencies are ‘systematically important’ and that whether they pose threats and risks to the wider financial markets.
In theory, of course, Bitcoin and the other cryptocurrencies are tiny – it creates no systemic risk if one company’s share price slumps, in the same way it didn’t cause a problem when Provident Financial or Dixons Carphone saw savage falls earlier this year. Cryptocurrencies are just another sector, as vulnerable or invulnerable to highs and lows as any other.
Certainly there are signs of leverage being introduced. The Financial Times recently reported that bitFlyer, the Tokyo-based Bitcoin exchange, is seeing leverage of up to 15x. Trading on bitFlyer is roughly 25 per cent in actual bitcoin and 75 per cent in derivatives.
images via forbes.com