Cryptocurrencies were once touted as a risk hedge. Now they look more like a risk spreader.
As markets slumped in unison on Thursday, traders pointed to the chaos in crypto as a focal point of their concern. Strategists are increasingly worried that small traders, already nursing losses from the meme stock craze, will be wiped out on their crypto holdings and sell everything else.
“Contagion here is not via linkages between the crypto ecosystem and the traditional financial system, but via retail investors sentiment,” said