Bank of America Global Research argues that digital assets and markets are more linked than we realize.
"If bitcoin, the largest token by market value, were to fall to $0, there would likely be limited or no impact on traditional financial markets. However, stablecoins are different, given the reserves that back them in the form of cash and traditional assets.
If a top stablecoin by market value were to become unpegged, leading to panic and resulting in a stablecoin run, the implications would likely extend into traditional financial markets," BofA notes.
"Our view is that the risk of a stablecoin run and the implications for traditional assets should not be ignored," BofA adds.