In a research report shared by Morgan Stanley last week, it was emphasized that Bitcoin's 40 percent depreciation since April is no longer due to its correlation with the stock markets.
In the report, penned by bank analysts, mass liquidations were attributed to decentralized finance and crypto-backed fixed assets being the subject of high-volume transactions and a limited number of real users on the platforms.
According to the news of Coindesk, a separate paragraph is opened on NFT and digital plots in the report, emphasizing that these investment products are subject to a lot of speculation. It is emphasized that the biggest factor for investors to buy these assets is the expectation that another buyer will buy them at a higher price, while it is stated that this expectation poses serious risks on asset prices.
The bank states that they were shocked by the collapse of the third-largest stablecoin TerraUSD (UST) in recent days, although crypto markets have been subject to heavy selling pressure since November.
After the collapse of TerraUSD (UST), uncertainty and instability have increased considerably in crypto-backed stable cryptocurrencies, the importance of which has increased in the DeFi ecosystem in recent years. It is stated that this situation also raises concerns about where many cryptocurrencies will be traded.
The Morgan Stanley report shared the opinion that the risk increase in the crypto markets may continue as long as the countries increase the interest rates and the US Federal Reserve continues the monetary tightening policy of the Fed.
Bank analysts, who think that the fixed crypto money sector, which has seen a 30-fold increase in value since 2020, also affects crypto prices, cited the fact that fixed cryptocurrencies provide too much liquidity and are responsible for leveraged transactions.
Sharing the concerns in the traditional markets, Morgan Stanley emphasized that investors are starting to question whether the massive decline in crypto money prices and the risk of the stability of stable currencies will create more systematic risk in the financial markets.