Bitcoin below $30,000: Is the crypto crash threatening the financial system?

Bitcoin fell briefly below $30,000 (€28,427) for the first time in 10 months on Tuesday, according to data site CoinMarketCap, while cryptocurrencies overall have lost nearly $800 billion (€758 billion) 

in market value in the past month as investors fret about tightening monetary policy.

Compared with the Federal Reserve's last tightening cycle which began in 2016, crypto is a much bigger market, raising concerns about its interconnectivity with the rest of the financial system.

How big is the cryptocurrency market?

In November, the most popular cryptocurrency Bitcoin hit an all-time high of more than $68,000 (€64,435), pushing the value of the crypto market to $3 trillion (€2.84 trillion), according to CoinGecko. 

That figure was $1.51 trillion (€1.42 trillion) on Tuesday.

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Bitcoin accounts for nearly $600 billion (€569 billion) of that value, followed by Ethereum with a $285 billion (€270 billion) market cap.

Although cryptocurrencies have enjoyed explosive growth, the market is still relatively small.

The US equity markets, for example, are worth $49 trillion (€46.4 trillion) while the Securities Industry and Financial Markets Association has pegged the outstanding value of US fixed income markets at $52.9 trillion (€50.1 trillion) as of the end of 2021.

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