The crypto and financial community sparked a number of discussions about the worrying state of one of the largest investment banks in the world, Credit Suisse, which could be dangerously close to defaulting and causing a massive crash on the markets, before the black swan no one anticipated potentially appeared on the market.
What is going on?
The story started when ABC Australia posted that a significant financial institution was in danger of going into default. Although the news source has not specified which bank is located in the state named in the article, financial analysts and economists have already identified a suspect.
With over $1.5 trillion in AUM, Credit Suisse is one of the largest investment banks in the world, but its recent performance has not been stellar. Throughout the year, the bank’s stock fell more than 60%, from almost $10 to $3.95. However, there are other problems than the market’s subpar performance.
Since the 2008 market crash, the cost of the bank’s credit default swaps has risen and is now at its highest level ever. A common tool that serves as a buffer against potential default is the CDS.
How will it influence the crypto market?
It is no secret that the performance of the financial markets outside of the blockchain community strongly influences the value of Bitcoin and other digital assets. Turbulence will undoubtedly result from the failure of such a big bank in high-risk sectors, including cryptocurrency.
Thankfully, over the past several weeks, we have noticed a growing dissociation of BTC from indexes like the S&P500, which may work in the assets based on blockchain in the event of a significant crash.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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