After recently writing that bitcoin – as well as other assets – were potentially back on track and pulling themselves out of the doldrums, the Fed has decided to slash rates as a means of combating negative market effects from the coronavirus, resulting in further drops for both the world’s leading cryptocurrency by market cap and for various stocks.
Bitcoin Now Has New Reasons for Suffering
This seems to be a running theme over the past few weeks. Bitcoin rises and falls, as do the stocks. Both took on a nasty hit last week, with the cryptocurrency dropping to as low as $8,300 (at the time of writing, it’s trading for about $8,700 per unit). The Dow Jones also fell by more than 1,000 points.
Yesterday, however, we noticed positivity sweeping through the trading arena as bitcoin rose to about $8,900 and the Dow Jones ended the day at approximately 1,290 points higher than when it had fallen. Now, we’re seeing the opposite effect.
Among the institutions that have largely been affected by the rate cuts are banks, including heavy hitters like JPMorgan and Bank of America. Both companies have experienced stock drops of roughly four and five percent respectively, while other institutions – like Citigroup and Morgan Stanley – have fallen by about two percent each at press time.
Overall, interest rates have been slashed by half in the past 24 hours, bringing them to their lowest figures since 2008 and the time of the Great Recession. Many banks have reported selling huge stock shares over the past 24 hours.
Mike Mayo, an analyst with Wells Fargo, says that maneuvers like these are always going to hit banks in spades. He comments:
No large bank short term is immune to the negative impact of lower interest rates on spread revenues.
The coronavirus has everyone scared from all corners of the globe. In regions of Europe, for example, the French government is putting in a heavy demand for protective masks to keep its public free and clear.
It’s Hard to Keep Everyone Safe
World Health Organization director-general Tedros Adhanom Ghebreyesus explained in an interview:
We are concerned that countries’ abilities to respond are being compromised by the severe and increasing disruption to the global supply of personal protective equipment, caused by rising demand, hoarding and misuse. We can’t stop COVID-19 without protecting our health workers.
In Iran, the virus has taken on new life, as more than 20 members of the nation’s Parliament are infected at press time. In Italy, France’s neighbor to the south, approximately 80 deaths have been recorded in what is being labeled the worst outbreak in a country other than China, and in the U.S., about seven deaths have been reported in Washington state, though approximately 15 separate states have reported coronavirus cases.
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Source: Live Bitcoin News