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Home Uncategorized

Crypto and Stocks are Down Today and Here is Why

Conie by Conie
April 12, 2024
in Uncategorized
Reading Time: 3 mins read
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  • Bitcoin falls to new lows as stock markets correct, driven by concerns about the Federal Reserve’s monetary policy and persistently high inflation
  • Rising inflation and tighter US Federal Reserve monetary policy are the drivers of the stock market downturn, making it challenging to advocate for Bitcoin investments during this period
  • China’s economic troubles, particularly in its real estate sector and disappointing foreign trade figures, introduce significant uncertainty into global markets, further impacting Bitcoin’s price movements

After reaching an all-time high on March 28, the S&P 500 has faltered, slipping below the 5,150-point threshold on April 12. Bitcoin (BTC) price has also reacted negatively within the same timeframe, so it makes sense to analyze if the drivers for the stock market correction also apply to cryptocurrencies.

Rising Inflation and Tighter Federal Reserve Monetary Policy Are the Key Drivers

The primary reason for today’s stock market downturn is persistent inflation prompting the central bank to maintain higher interest rates, thereby reducing liquidity. However, this scenario might be seen as inherently positive for Bitcoin, as like gold, the cryptocurrency benefits from being a scarce asset.

On April 10, the yield on the US Treasury 5-year note climbed to its highest level in five months, signaling investor discontent with returns below 4.5% in light of the inflation outlook. This situation has two major repercussions: first, the government faces higher costs when refinancing its debt; second, companies are discouraged from hiring and expanding due to more attractive fixed-income returns.

JUST IN: Crypto and stocks are plummeting today 📉 pic.twitter.com/XtjNnimwT0

— BlockNews.com (@blocknewsdotcom) April 12, 2024

Concerns Over Slowing Growth in China Adds Uncertainty

In addition to the stricter Federal Reserve monetary policies and waning confidence in the US economy, China is now a significant source of concern due to troubles in its real estate sector and recent disappointing foreign trade figures.

China introduces significant uncertainty into global markets, yet its effect on Bitcoin prices remains uncertain. Still, it would be overly optimistic to expect investors to increase their cryptocurrency holdings if the S&P 500 continues to decline.

Conclusion

With only a minority of market participants viewing Bitcoin as a safe haven, suggesting that the cryptocurrency could flourish during a stock market downturn is speculative at best.

Disclaimer: BlockNews provides independent reporting on crypto, blockchain, and digital finance. All content is for informational purposes only and does not constitute financial advice. Readers should do their own research before making investment decisions. Some articles may use AI tools to assist in drafting, but every piece is reviewed and edited by our editorial team of experienced crypto writers and analysts before publication.
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Conie

Conie

Conie is a Web3 enthusiast, an experienced creative writer, and a passionate gamer. With her ability to fuse innovation with imagination, she brings a distinctive perspective to each piece she writes, delving into the ever-changing territories of the digital world, storytelling, and virtual adventures.

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