Shares v Crypto

In the first week of February, many of the global share markets experienced their biggest losses since the 2008 financial crisis. While the Dow and S&P 500, the main indices for U.S. shares, have since recovered somewhat, volatility is creeping in.

The share markets had been gaining continuously along with resurgent jobs growth and improving economic activity in the U.S. and Europe. Most economies finally consider themselves to have overcome the lasting impacts of the 2008 crash.

However, the upturn also brings wage growth and rising prices, to which the Fed, the U.S. reserve bank, has responded with hikes in its benchmark interest rate for borrowing. Investors fear lower future returns, and this has thrown markets into turmoil.

What’s next?
While cryptocurrencies have also lost value recently, investors were already rushing into crypto when the markets showed stable growth. As established markets struggle, people may increasingly look to cryptocurrencies to invest their money.

Meanwhile, cryptocurrencies are aiming to mature and move towards more stability. Projects like TrueCoin are planning to establish fiat-currency-backed blockchain-based ‘stablecoins’ that balance security, decentralization, and market stability.

Our thoughts
Share markets have returned to some comfort. For now, most investors still trust them more than cryptocurrencies, despite being backed by national central banks and the potential for failure that brings. Until coins and blockchain technology underlie important parts of the economy, that may well stay that way.

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