The market may have seen the arrival of the black swan that nobody saw coming. Credit Suisse is a central global investment bank. There is a real possibility that the bank may collapse, which would lead to a catastrophic market meltdown.
The crypto and finance sectors triggered the conversations that led to this.
What Is the Situation?
Some time ago, ABC Australia reported that a significant financial institution was close to defaulting. It was the point when everything began to unfold. Economists and experts in the financial sector have narrowed the suspect pool down to a manageable size.
This is even though the news organization has not revealed the target bank. Credit Suisse has not had a particularly successful year. Credit Suisse is a central global investment bank. Over $1.5 trillion in assets are under its management.
The bank’s stock plunged by almost 60%. That decline takes place over a year. It’s dropping from over $10 bucks to $3.95. However, underperformance in the market isn’t the only cause for alarm.
Credit default swaps at the bank have skyrocketed in price. It had reached an all-time high not seen since the 2008 market crash. One of the most prevalent instruments in the financial market is the credit default swap (CDS). It acts as a safety net in case of default.
What Kind of Effect Will This Have on The Cryptocurrency Market?
The success of other financial markets significantly affects blockchain’s ability to thrive. Such events can impact Bitcoin and other digital assets, which is not a secret.
A significant bank failure would cause widespread disruption throughout high-risk industries. The cryptocurrency industry is one example of such a field.
Much to the relief of the people, there has been activity during the last several weeks. There has been a general observation of Bitcoin’s increasing uncoupling from benchmarks like the S&P 500. Potentially beneficial for blockchain-based assets in the case of a severe market downturn.
The Potential for Total Collapse
Commodity trader Peter Brandt has stuck steadfastly to his original prediction. He believes bitcoin may reach a price of zero. The chartist still maintains their belief based on a probability of 0.5. according to them, something so terrible might happen.
In the same breath, Brandt says that an increase is equally likely. The most valuable cryptocurrency, he said, may reach $250,000 in value. To that, he said, the cryptocurrency offers an asymmetrical reward-to-risk exchange.
The trader predicted that zero might be the last low for Bitcoin, as reported by U.Today. This followed a steep decline in the price of the cryptocurrency. The decrease occurred in March of 2020, when a worldwide epidemic hit.
Bitcoin, however, began a second bull run only a few short months afterward. At one point, the bull run pushed prices to a record $69,000.