As a result, investors withdrew their funds from the crypto market, which led to the fact that Tether (USDT) lost its peg to the dollar, and some of the largest Bitcoin companies were forced to lay off a significant number of employees.
The global economic consequences exacerbated the problem, which led to a drop in token prices and a liquidity shortage. Nevertheless, there are now numerous signs that the worst is over.
Citi believes that the crypto markets are too small and relatively isolated to create an avalanche effect on the financial sector or the economy, but they can still affect the mood of investors. The bank’s assessment suggests that fears of contagion are likely to have peaked, at least temporarily.
Financial analysts recently told CNBC that they are not worried about the impact of cryptocurrencies on the US economy in general, since cryptocurrencies are not associated with debt. According to economist Joshua Gans of the University of Toronto: