Morgan Stanley Links Crypto Crash to Speculations and Lack of User Demand

Crypto Crash

Morgan Stanley has blamed speculations and the lack of real user demand to the recent crash in cryptocurrencies, especially stablecoins.

The financial institution noted in a report that it was shocking that the third largest stablecoin terraUSD could depeg against the dollar and eventually collapse.

It added that the most speculative and leveraged areas of the cryptocurrency market are likely to focus on the interest rate rises and Fed-adjustments in liquidity.

Morgan Stanley says that the market is looking into whether the drop in cryptocurrency prices and the depegging of stablecoins could cause systemic risk to the larger financial market.

Stablecoins supported by cryptocurrencies have gained importance in the DeFi environment, with the crash signaling uncertainty and instability in the space.  

Non-fungible tokens are digital assets based on a blockchain representing ownership of virtual or physical items that can be sold or traded. DeFi refers to lending, trading, and related financial activities through a blockchain network.

Source: Coindesk

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