NEW YORK — Cryptocurrency markets have surged in recent months and years, partly fueled by the supportive stance of former U.S. President Donald Trump’s administration, which encouraged wider adoption among financial institutions.
According to CoinGecko, a leading crypto tracking firm, the total value of cryptocurrencies stands at $3.2 trillion, with a daily trading volume of around $197 billion. Despite this impressive figure, the sector still represents only a small fraction of global financial markets.
Regulators and investors, however, remain cautious about whether any issues in the lightly regulated crypto world could spill over into the broader financial system, Reuters reports.
Bitcoin, the largest cryptocurrency, fell below $90,000 this week for the first time since April, and the total crypto market has lost roughly $1.2 trillion in value over the past six weeks. The monthly rolling correlation between Bitcoin and the S&P 500 hit 0.84 this week, marking the strongest link in six weeks, according to London Stock Exchange data.
Stablecoins—cryptocurrencies pegged to real-world assets like the U.S. dollar—maintain reserves equal to the tokens in circulation and allow holders to redeem their coins for dollars on demand. Experts warn, however, that a surge in redemption requests could put pressure on these reserves, potentially affecting the banks where funds are deposited or the assets in which the reserves are invested.
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