Wells Fargo believes that the Bitcoin implosion could affect the stock market, according to CNBC.
Christopher Harvey, head of equity strategy at the bank, said in an interview with CNBC: “There is a significant amount of froth in the crypto markets. We do think that if that froth comes out, it will start to spill over. It’s not going to happen in a vacuum.”
His remarks were provoked by the massive drop of cryptocurrency prices just before Christmas. While not generally seen as a cause for too much concern in the cryptocurrency community, fears of a bubble persist.
Hedging his comments, Harvey said: “This is just a very small, shall we say, blip, or a bit of volatility, but if we see more of that, I would expect to see that volatility affect the equity market.”
We reported on Wells Fargo recently when the company paid $3.4 million in restitution and fired four forex traders in response to charges of front running, and when it accidentally released the personal data of 50,000 of its wealthiest clients.
Reactions to the price drop
The day before the correction/crash, Peter Schiff, CEO of broker Euro Pacific Capital, said to Russia Today that he considers Bitcoin-branded tokens to be worthless: “There is no value in bitcoin, you can’t use it as money… It’s too slow, too expensive and too vulnerable.”
He predicted that all late bandwagon passengers will lost their money: “Right now, the only reason why people are buying bitcoin is because the price is going up….”
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Yesterday, Morgan Stanley analysts said that the true value of Bitcoin could actually be zero.
— Kohei Kurihara (@kuriharan) December 25, 2017
Analysts working for the financial services giant cited the tiny number of retailers that actually accept the coin as payment.
However, those in the cryptocurrency community tend to have seen the issue as a natural correction. Cryptocurrency touter John McAfee said:
OK Everyone … stop panicking about the across the board dip in cryptocurrencies. It’s Christmas for f-ck sake. The costliest time of the year. People are cashing in to buy presents which no-one wants or ever uses but pretends to be thankful for. After Xmas – big boom.
— John McAfee (@officialmcafee) December 22, 2017