KARACHI – The recent global cryptocurrency meltdown is sending shockwaves through Pakistan’s equity market, intensifying the decline at the Pakistan Stock Exchange (PSX) and raising alarms among investors. Analysts warn that the crypto collapse is no longer confined to digital assets alone — its ripple effects are now destabilizing traditional financial markets, particularly high-risk equities.
The dramatic fall in cryptocurrency valuations worldwide has wiped out billions in digital-asset wealth, prompting both institutional and retail investors to retreat from riskier investments. In Pakistan, many crypto investors also hold positions in equities, creating a dual pressure on the PSX as they liquidate stocks to offset losses in the digital market.
Experts point to two main channels through which the crypto meltdown is affecting the stock market. The wealth effect has led investors to cut exposure to equities after suffering losses in digital currencies, while risk contagion has triggered a broader reevaluation of high-beta and speculative stocks. This cautious sentiment has resulted in widespread sell-offs across multiple sectors, magnifying the market slide.
The timing of this shock is particularly concerning. Pakistan’s stock market is already navigating multiple challenges, including policy uncertainty, currency volatility, and global economic pressures. The simultaneous crypto and equity market stress underscores how interconnected financial systems have become, with turmoil in one segment quickly spilling over into others.
Market analysts warn that unless there is stabilization in global digital assets or clear government policy intervention, the downward pressure on Pakistan’s equities may persist. Investor confidence remains fragile, and the recent turmoil is a stark reminder of how quickly sentiment-driven shocks can cascade from emerging sectors like cryptocurrency into conventional financial markets.
This story has been reported by PakTribune. All rights reserved.