Could the market’s completely new darling become its next black swan event
The bitcoin craze could pose a real risk to the broader market next year, Deutsche Bank warned last week, ahead of the cryptocurrency’s launch on futures exchanges, scheduled to take place Sunday.
Torsten Slok, the firm’s chief international economist, sent to clients a list of significant risks to the market in 2018. Included on that will list: A crash inside cost of bitcoin, higher inflation as well as the threat of North Korea.
Bitcoin has emerged as a financial phenomenon This specific year as the digital currency sees $1,000-plus swings within hours. At This specific juncture, as the cryptocurrency has advanced quadruple digits This specific year, Slok said the markets have not correctly priced inside broader impact bitcoin could potentially have.
Deutsche Bank’s risks to the market in 2018
“the item will be something that will I think financial markets so far have been discounting as a little issue,” the economist said Thursday on CNBC’s “Trading Nation.” He said he worries about whether bitcoin as well as its wild cost swings could become “more systemic” next year if the current trends continue.
“The worry, of course, that will one can have will be that will the item’s catching on quite substantially. as well as of course with the speed with which prices are going up, then you do wonder where prices will be even by the end of 2017. yet we do think that will in 2018, This specific, of course, will continue to be a topic, as well as there are quite a few questions that will remain unanswered,” Slok said.
While bitcoin has more than its share of true believers — many of whom have sent its cost on a dizzying rally to around $19,000 just last week — the digital currency’s volatility as well as lack of transparency has earned the item a fair number of critics.
Last week, “Mad Money” host Jim Cramer likened bitcoin trading to “an abstruse casino game that will seems to have only winners as well as no losers. You’ve got to like that will, right? I think, though, that will could change,” Cramer said.
Specifically, questions persist around regulation of the cryptocurrency as well as transparency in what exactly investors hold, according to Deutsche’s Slok.
The cryptocurrency’s cost rose above $19,000 for the very first time on Thursday before tumbling more than 20 percent, according to Coinbase data.
Its volatility could intensify in days ahead as exchanges prepare to launch bitcoin futures trading.
–CNBC’s Liz Gurdus contributed to This specific report.