If the Cryptocurrency Bubble Explodes, Could If Affect Other Stocks?

bitcoin ICO suspension

If Bitcoin and the likes of other cryptocurrencies saw their bubble bursting, it would have a massive effect on the stock market as a whole. Some are saying that is the coin were to blow up, it would have significant “collateral damage.”

The result of this would be similar to the comments made by Jamie Dimon, the CEO of JPMorgan Chase, who recently stated that the market on cryptocurrencies is “fraud.”

The chief market strategist at Ameritrade Joe Kinahan, stated that “anybody getting more than give percent of their business from crypto, it’s starting to become significant, and you could see their stock prices very quickly collapse.”

Some of those at risk, are the very companies that have seen their stocks rise along with the cryptocurrency market. One of those companies is Nvidia, the maker of the chips that so many who mine coins use for that purpose.

Kinahan also stated that “any product that blows up, there’s always collateral damage.”

Many are looking at Bitcoin and the cryptocurrency market as a whole in relation to the dot com bubble of the late 1990s, thinking that it will soon burst.

One of the scenarios that has added concern to the idea that the market is a bubble is the new phenomenon of initial coin offerings or ICOs. Companies have begun to use ICOs, essentially offering coins instead of stock to get capital, as their primary source of funding.

This had led to the creation of many altcoins, some successful, but others complete failures. As the market is continuing to expand, the market on altcoins is increasing, leading to a devaluing of all other cryptocurrencies as well as a delegitimizing of the industry as a whole. If this continues, there’s no telling where the industry will go.



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