According to an AJ Bell investment analyst, there are “no signs of spillover” from cryptocurrency into more traditional assets.
Millions of dollars were lost when the exchange FTX went bankrupt, raising concerns about whether crypto-related movements could reverberate through to other financial systems.
“Crypto has a lot of money, but it’s kind of built up as a separate ecosystem,” said Laith Khalaf, head of investment analysis, on “Squawk Box Europe” on Wednesday.
However, this does not rule out the possibility of future overlap.
“If we had a more system-wide issue you could start see it affecting other assets,” Khalaf said, “but I don’t really see that,” he added.
In two separate court filings in November, FTX’s lawyers stated that the company had more than one million creditors and owed $3.1 billion to its top 50 unsecured creditors.
After being arrested on Monday, the exchange’s founder and former CEO, Sam Bankman-Fried, was charged with defrauding investors on Tuesday.
A “highly volatile” investment?
Being such a volatile asset, Khalaf was hesitant to forecast where cryptocurrencies will go in the future.
“Bitcoin could be at $5,000 or $50,000 when we’re talking about it now next year. Because the market is so heavily influenced by sentiment, I just wouldn’t be surprised,” Khalaf said.
While there are some concerns about the long-term uptake of cryptocurrencies, Khalaf made one point very clearly.
Cryptocurrency “remains a highly speculative and volatile asset for the foreseeable future,” he said.