How Wall Street escaped the crypto meltdown

economictimes.indiatimes.com:

cryptocurrency market, analysts at

, a French bank with a Wall Street presence, pulled together a list of 50 stocks they thought were overpriced — including many with strong links to digital assets. They nicknamed this collection the “cappuccino basket,” a nod to the frothiness of the stocks. The bank then spun those stocks into a product that essentially gave its biggest clients — pension funds, hedge funds, the managers of multibillion-dollar family fortunes and other sophisticated investors — an opportunity to bet that the assets would eventually crash. In the past month, as the froth around bitcoin and other digital currencies dissipated, taking down some cryptocurrency companies that had sprung up to aid in their trading, the value of the cappuccino basket shrank by half.

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In the wake of the crypto market crash, the prices of hardware used to support the mining of crypto assets are also falling dramatically. For example, a high-end graphic card is now almost 45% cheaper compared to its price a few months ago.

Wall Street clients of BNP who bet that would happen are sitting pretty. Those on the other side of the trade — the small investors who loaded up on overpriced crypto assets and stocks during a retail trading boom — are reeling. “The moves in crypto were coincident with retail money flooding into U.S. equities and equity options,” said Greg Boutle, who heads BNP’s U.S. equities and derivatives strategy group, which put together the trade. “There’s a big bifurcation between retail positioning and institutional positioning.” He declined to name the specific stocks that BNP clients got to bet against. In the great cryptocurrency bloodbath of 2022, Wall Street is