V God: We expect the currency circle to be more like the stock market, but the US stock market has become more like cryptocurrency
At two o'clock in the morning on June 11 in Taiwan, the US Federal Reserve released the latest summary of economic forecasts, announcing that it will keep interest rates unchanged at 0-0.25%, and report that the US gross domestic product (GDP) may shrink by 6.5% this year. The Chairman of the Federal Reserve Powell emphasized that the medium-term economic outlook is full of uncertainties. On the same day, the US stock market had its worst single-day closing performance since the plunge in mid-March, and then rebounded the next day.
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Pictured above: V God’s tweets on Twitter
What we expected: cryptocurrency would normalize and become more like the stock market What happened: the outside world went crazy and the stock market became more like cryptocurrency
— vitalik.eth (@VitalikButerin) June 12, 2020
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Elon Musk also uses memes to darken US stocks
After the Fed made pessimistic predictions, it was generally considered to be the reason for the sharp drop in U.S. stocks. On the same day, it not only attracted criticism from U.S. President Trump, accusing the FED of often making misjudgments.
The Federal Reserve is wrong so often. I see the numbers also, and do MUCH better than they do. We will have a very good Third Quarter, a great Fourth Quarter, and one of our best ever years in 2021. We will also soon have a Vaccine & Therapeutics/Cure. That's my opinion. WATCH!
— Donald J. Trump (@realDonaldTrump) June 11, 2020
Chinese translation: [I have also seen the data, but my judgment is much better than that of the Fed. The United States will usher in a good third quarter and a rising fourth quarter; next year's economic growth will become one of the best performances over the years, and there will soon be a vaccine/treatment against the new crown virus, which means is my opinion. 】
On the 10th, Tesla, whose stock price has risen suddenly, its CEO Elon. Elon Musk also wrote a reminiscent tweet on the day when the U.S. stock market fell sharply.
The three letters of lol are the abbreviation of laugh out loud, which immediately made the outside world wonder what caused Musk to laugh (or sneer)? One of his followers asked Musk why he laughed, and he replied to the tweet " Stonks" (He's laughing at Stonks.)
lol
— Elon Musk (@elonmusk) June 11, 2020
Stonks
— Elon Musk (@elonmusk) June 11, 2020
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Source: stankmemes.com
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So what happened to US stocks in the past few months?
Frequent comparisons of the correlation between the stock market and cryptocurrencies emerged around late February of this year, when the sell-off in the stock market started to gain momentum. According to foreign media U.Today, the trend of the S & P 500 index on February 28 looked like the occasional Bitcoin sell-off we would encounter, and the cryptocurrency market remained relatively stable at the end of February.
But as recently as early March, it became apparent that bitcoin prices were highly correlated with global stock markets. At that time, in response to the impact of the new coronavirus epidemic on the economy, the Federal Reserve lowered the benchmark interest rate to almost zero and launched a quantitative easing of US$700 billion, causing the market to panic and plummet. The overleveraged cryptocurrency market also collapsed under selling pressure on March 12, with bitcoin plunging more than 51%, its biggest one-day drop in seven years.
The three major U.S. stock indexes also fell by 7% in early trading on the 12th. The Dow Jones Index fell by nearly 10% at the close, the largest drop since 1987. Then on March 15, the S&P 500 index hit a new high. 11.98%, US stocks triggered a total of 3 circuit breakers in the following two weeks.
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US stocks ushered in a new wave of shocks in June
After the heavy losses in March, US stocks rebounded rapidly. Among them, the S&P 500 Index rebounded all the way since it bottomed out on March 23, with an increase of more than 40%, until June 11 when Wall Street encountered another sharp drop. On the same day, the Federal Reserve warned that the economic damage caused by the new coronavirus epidemic may make the medium-term US economic outlook not optimistic, so the rebound of the stock market since March has encountered obstacles. The Dow fell 6.90%, plunging 1,800 points; the S&P 500 fell 5.89%, wiping nearly $2 trillion in market value; the Nasdaq also fell 5.27%.
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Bitcoin trend. Source: TradingView
The high volatility of the global stock market is still continuing. Bitcoin rebounded along with the US stock price on the 12th, reaching $9,418 by the time of writing.
"New Aspects of Blocks" believes that:Although the price of Bitcoin has also experienced a catastrophe with the global stock market, but summing up the growth rate from the beginning of the year, the price of Bitcoin has still grown by nearly 36%.
