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Vance Spencer outlines two main features of financial crises: runs and contagion.
He explains that, once investor confidence in the liquidity of a private credit fund is lost, it can set off a destructive cycle. Redemptions force funds to sell illiquid loans, leading to markdowns and further redemption pressures. Spencer highlights that this vicious cycle persists, especially in the digital age.
Spencer has previously commented on changing investor preferences during periods of uncertainty. He reported that gold traded at a discount in the Middle East while Bitcoin gained favor. The shift was notable in conflict zones, according to his earlier analysis.