Friday, December 2, 2022

A Crypto Crash Won’t Hurt The US Economy: Goldman Sachs

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The crypto crash won’t hurt the US Economy according to the latest reports by Goldman Sachs, which outlined the recent decline is quite small relative to the US household net worth so it will not have a major impact as we can see more today in our latest cryptocurrency news.

The investment bank Goldman Sachs said that the crypto crash won’t hurt the US economy likely. The New York City-based multinational said that the recent decline in the crypto prices is quite small compared to the US Household’s net worth. The crypto market tumbled immensely this year. BTC as the biggest digital asset by market cap is trading at $29,000 marking a 57.83% lower than the November 2021 ATH of $68,789. the market’s downtrend accelerated the past two weeks because of the collapse of Terra’s LUNA and its UST token.

The researchers at the investment bank also said that billions of dollars of investors’ money has been wiped out but the US households holt a lot of cryptos so there’s no cause for concern:

“This [the crash] has prompted questions about whether this drop in wealth might affect spending and labor supply in the US.”

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The report continued:

“Our rough estimate is that U.S. households own about one-third of the global crypto market. If so, the recent decline is very small relative to US household net worth, which stood at $150 trillion as of last year. We, therefore, expect any drag on aggregate spending from the recent declines in cryptocurrency prices to be very small as well.”

The node added that the impact of the US Labor force participation rate will be too small because the force participation of the younger men that mostly hold crypto already recovered to pre-pandemic levels. The note added:

“When considering the impact of the crypto pullback on the U.S. economy, a major caveat is that a large share of crypto wealth is held by citizens of other countries.”

As earlier reported, The Wall Street banking giant Goldman Sachs offered its first BTC-backed loan and according to a spokesperson for the bank, the lending facility loaned cash collateralized by the BTC by the borrower. The deal was quite interesting for Goldman because of the structure and 24-hour risk management that they added according to Bloomberg reports. The arrangement allows crypto owners to get fiat such as USD by using the crypto as collateral but this is the first for the bank.

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