Deutsche Bank Economist Says a Bitcoin Crash Would Endanger Global Markets

An economist at Deutsche Bank thinks a crash in the price of bitcoin will be among the top risks to broader markets in 2018.

Torsten Slok, Deutsche’s Bank’s Chief International Economist, recently sent clients a list of 30 market risks which could impact growth next year. The list, shared with outlets including Bloomberg, ranks a bitcoin crash as the 13th-highest risk, behind various central banking challenges and overvaluation of U.S. equities.

It’s not hard to argue bitcoin is in a hype-fueled bubble, but Deutsche’s concern that it could impact the global economy still seems at least slightly overblown. According to Coinmarketcap, the total market value of all cryptocurrencies — including not just bitcoin, but Ethereum, Litecoin, and all the rest — is now swinging around $400 billion. For comparison, the total value of the U.S. housing market, which lay at the heart of the 2008 financial crisis, was estimated at $29.6 trillion in 2016 — or more than 70 times higher than cryptocurrencies’ current total value.

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That doesn’t mean a bitcoin bust couldn’t contribute to a broader meltdown, but it’s hard to see it as a systemic risk in itself. Aside from pure size considerations, bitcoin owners are spread across the entire globe, which would also spread any crash’s impact.

Despite that, Slok’s list ranks a bitcoin crash above both Robert Mueller’s investigation of Donald Trump, which could result in the impeachment or even indictment of a sitting U.S. President, and North Korea, whose missile testing could spark a full-blown war. The bitcoin bubble, it seems, isn’t just in its price, but in outsized assessments of its broader economic significance.

Maria Dehn

Maria Dehn has held editorial management positions for numerous print and Web publications. She has more than 17 years of Information Technologies and journalism experience and has written many reports on cloud computing. You can reach her on Twitter @MariaDehn

Maria Dehn

Maria Dehn

Maria Dehn

Maria Dehn

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Maria Dehn

Maria Dehn has held editorial management positions for numerous print and Web publications. She has more than 17 years of Information Technologies and journalism experience and has written many reports on cloud computing. You can reach her on Twitter @MariaDehn