Bitcoin turmoil seeps into traditional financial markets

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A huge drop and snap back in cryptocurrency prices this week rippled into traditional asset classes, potentially offering a taste of what could happen in the event of a more severe shake-up.

Some government bonds gained in price on Wednesday, while futures on the US benchmark S&P 500 equities index dipped and oil also pulled back after the price of bitcoin plunged 30 per cent on signs that China was preparing a crackdown on digital tokens. The Japanese yen β€” a currency often in demand in times of stress β€” also popped higher.

Hours later, bitcoin rebounded sharply. But it was unusual for the ructions to catch the attention of mainstream market participants.

β€œThe catalyst for these moves appears to have been a sudden rout in bitcoin,” wrote Richard McGuire and Lyn Graham-Taylor, rates analysts at Rabobank, in their regular note the following day. β€œSo here we are. Even as august an organ as the Rabo Rates Daily has finally been…

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