S&P Warns That Retail Investors Would Be Hit Hard By Digital Currency Market Collapse


Amidst strong volatility in the Crypto currency market, different virtual currencies have seen the prices falling sharply in the current year. As a result, retail investors would be hit very hard and would feel the pinch of it the most, CNBC quoted S&P Global Ratings as saying.

The rating agency thinks retail investors would be the first to bear the brunt in case the digital currency market collapses at this stage. On the other hand, the agency believes that rated banks were mainly insulated due to their limited exposures towards the Crypto currencies either directly or indirectly.

As different governments around the globe indicated that they would take every effort to control the virtual currency, there was a strong volatility in the prices of different type of digital currencies available in the market. This was quite evident when the prices of Bitcoin traded close to $20,000 in December and started to trade below the $10,000 mark earlier this year. Currently, bitcoin is trading below the psychological mark of $6,000 in the midst of continued to sell-off.

However, there was a saving grace for retail investors. S&P Global ratings report suggested that a big drop is not likely to disrupt financial markets. The statement said, “For Now, a meaningful drop in Crypto currencies’ market value would be just a ripple across the financial services industry, still too small to disturb stability or affect the creditworthiness of banks we rate.”

The rating agencies comment assumes significance since the virtual currencies are not backed by any governments around the globe. On the other hand, authorities have become more concerned on the speculation of the digital currencies and the related activities such as unlawful activities.

The CNBC report quoted the S&P Global Ratings that the future success of the virtual currencies depends mostly on the international regulators as to what kind of policy they intended to make. This included coordinated approach towards the digital currency market and the steps to improve the confidence on the financial instrument.

In any case, the agency believes that Blockchain technology would be a positive thing for disrupting the financial segment. The agency viewed that Blockchain network were decentralized and continue to grow Crypto currency transactions.

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