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Bitcoin bust could be a positive as resilient stock market works through yet another bubble pop

Traders on the floor of the New York Stock Exchange.
Source: NYSE

A plunge in cryptocurrencies led to a broad sell-off in stocks Wednesday, but it could be a blessing in disguise over the long run with the equity bull market weathering yet another speculative bubble pop.

Bitcoin's 30% crash in one day sent cryptocurrency-linked shares dropping, and the sell-off spilled over to other sectors of the market with the S&P 500 falling as much as 1.6% on Wednesday. Many on Wall Street believe that the selling is just temporary and the stock market is better off in the long term without the crypto mania.

"This was bound to happen at some point in '21 and a somewhat of a reset in crypto-pricing is likely more healthy vs negative for the broader equity markets over time," Jordan Klein, an analyst at Barclays, said in a note.

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