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Nassim Taleb, author of The Black Swan and adviser for Universa Investments, said during CNBC’s Squawk Box on Aug. 6 that the cryptocurrency market’s abrupt downturn on Aug. 5 shows Bitcoin (<a href="https://cointelegraph.com/bitcoin-price">BTC</a>) is a poor hedge against a systemic meltdown.
“Bitcoin is proving once again that it’s not a hedge against your assets melting,” according to Taleb, whose book The Black Swan explores the science of randomness and extreme outliers. 
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 <img src="https://s3.cointelegraph.com/uploads/2024-08/ee7ec367-b8e2-4a0b-b808-6696551c2e8a.jpg" alt="‘The Black Swan’ author says Bitcoin a poor hedge against market meltdown" title="">
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 Taleb is the author of “The Black Swan,” a bestseller exploring extremely rare events. Source: Penguin&nbsp;
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On Aug. 5, the entire crypto market saw a <a href="https://cointelegraph.com/news/crypto-crash-300-billion-largest-three-day-plunge-crypto-one-year">$510-billion drop in total market capitalization</a>&nbsp;amid a marketwide downturn. Following the sell-off, over 60% of the top 50 cryptocurrencies lost all the gains made during 2024, <a href="https://x.com/binhdangg1/status/1820730857289822685/photo/1" target="_blank" rel="noopener nofollow">according</a> to CryptoQuant. 
Other asset classes bled, too. The S&amp;P 500, an index of large stocks in the United States, fell by more than 5%, and Japan’s Nikkei plunged by around 12%. However, according to CoinMarketCap, BTC’s fall was worse, dropping by some 18% on the day.
Related: <a href="https://cointelegraph.com/news/how-the-yen-carry-trade-wiped-out-crypto">How the Bank of Japan wrecked the yen carry trade — and crypto markets</a>
Bitcoin performed worse than other assets because it is “a speculative asset that seems to behave like high-price real estate in Manhattan,” existing mainly to “track the stock market,” Taleb claimed. He said gold is a superior store of value because with “a gold chain, if you put it on the ground 10,000 years, it will still be gold.”
Bitcoin is sustained by a global decentralized network of miners estimated to comprise approximately 1 million individuals. It has proven highly resilient since its launch in 2009, but anxieties persist about Bitcoin’s longevity, especially as its fixed supply of mining rewards — 21 million BTC in total — dwindles. 
The crash was <a href="https://cointelegraph.com/news/how-the-yen-carry-trade-wiped-out-crypto">triggered by the Bank of Japan’s July 31 interest rate hike</a> and a subsequent spike in the price of the yen in currency markets. This drove up costs for foreign borrowers with yen-denominated debt, $2 trillion of which was outstanding just before the crash, <a href="https://think.ing.com/articles/jpy-peeling-back-the-carry-trade-onion/" target="_blank" rel="noopener nofollow">according</a> to a report from ING Bank. 
It fell especially hard on the crypto market, which collectively borrowed nearly $40 billion to finance risky leveraged trades, according to CoinGlass. 
Magazine:&nbsp;<a href="https://cointelegraph.com/magazine/clicker-games-airdrop-speculation-web3-games-hamster-kombat-review-cointelegraph-magazine/">Clicker games to fade post-airdrop, Is Hamster Kombat any good? Web3 Gamer</a>

‘The Black Swan’ author says Bitcoin a poor hedge against market meltdown

Cointelegraph

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