Home CryptocurrencyAltcoins Stocks are Crashing – How is Crypto Responding?

Stocks are Crashing – How is Crypto Responding?

by Pragati Shrivastava
, Stocks are Crashing – How is Crypto Responding?

The economic outlook appears to be grim as U.S. stocks hit a one-month low, with Wednesday’s drop the sharpest in over six weeks. Private sector hiring and manufacturing has slowed down amidst fears of a trade war with China which is hurting the economy. Technology stocks, the ones that power the U.S. economy took over a 2% hit and the industrial and materials sectors also fell more than 2% each, posting the biggest declines among the 11 major S&P sectors. The Dow Jones Transport Average, often looked at as a gauge of the economy’s health, dropped by 2.24% and experts are speculating a bear market for years, like the crisis of 2009. The stock market has witnessed crashes in the past however the likely cause for the current situation is derivatives, speculation on the Bitcoin ETF and other cryptocurrencies.

How are Cryptocurrencies responding?

During the second quarter of 2019, Bitcoin performed better than it did throughout 2018. Social media giant, Facebook, announced plans to launch Libra, their a digital currency, and leading bank JP Morgan started trials for its cryptocurrency JPM coin. Bitcoin’s price hit $14K before rebounding to the $10-11K level – then crashed to around the $8500 support level on Tuesday last week. The price is currently $8270, down 1% in the past 24 hours.

In response to the market crash, cryptocurrencies have shown no signs of a revival and have lost considerable market share in the past week. The same rapid drop hit all top altcoins with around 20% of market capitalization being wiped off all of the biggest digital currencies. The price of Bitcoin and other cryptocurrencies now appears to have settled, however there remains to be bearish sentiment in store for the coming weeks. Bitcoin has been correcting downwards since Tuesday.

The market capitalization of cryptocurrencies dropped by 12 Billion in less than 24 hours last week. Leading altcoins like Ripple and Ethereum have recovered slightly but there are still bearish sentiments which indicates that there is unlikely going to be a complete recovery in the following weeks.

Stock experts have added that the persistent trade war between Washington and Beijing have left most businesses anxious about import prices and supply chain disruptions. Investors turning to Bitcoin as safe haven were disappointed by the price crash and pulled back funds to invest in traditional commodities like gold. Traders and markets blamed Bitcoin’s price slide on heavy selling at leveraged exchanges and stock crashes. Others blamed sell off on the upcoming hardforks and software upgrades in cryptocurrency networks that could destabilize altcoins and their positions. It’s important to note that the price of Bitcoin tends to be sensitive to geopolitical tension and debates over how the crypto network evolves.

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