The Fed Chair’s Hawkish Statements Have Stocks and Cryptocurrencies Trembling — The Bitcoin Markets Still Exhibit a Strong Correlation With the Three Major Benchmarks
After chair of the Federal Reserve Jerome Powell highlighted that restoring stability to the American economy and the current price volatility will take “some time,” the head of the central bank stated that “some pain” would be experienced as a result of the Fed’s stringent policy. Wall Street trembled in response to Powell’s comments made in Wyoming, and by the time the closing bell rang on Friday, all three major benchmarks (S&P 500, Dow Jones, and Nasdaq Composite) had dropped by more than 3 percentage points. The Nasdaq was the market that fell the most on Friday, falling by 3.94% and recording its largest losses since the middle of June. The S&P 500 ended the day with a loss of 3.37%, landing at 4,057.66 points, while the Dow Jones Industrial Average lost more than 1,000 points, or around 3.03% of its value. The two most valuable precious metals in the world, gold (Au) and silver (Au), both started the weekend with losses ranging from 1.13% (Au) to 1.79% (Au). When measured against the value of the United States dollar, platinum (Pt) and palladium (Pd) both experienced losses of 1.49% and 2.38%, respectively.
The remark provided by the chair of the Federal Reserve did not sit well with cryptocurrency markets, which resulted in a 6% loss for the crypto economy on Friday and a further 4% loss on Saturday afternoon (EST). Bitcoin, the most prominent cryptocurrency asset, had its price fall below the $20,000 per unit zone for the first time since the middle of July during the trading sessions that took place late in the afternoon on Saturday (EST). After the CFGI rating had been moving higher until August 14, Bitcoin.com News reported that it had fallen to a score of 33 on August 19. This came after the CFGI rating had risen higher until August 14.
The current CFGI score is a 28, which represents “fear.” This is a significant drop from the previous score of 33, which was recorded nine days ago. The Cboe Volatility Index (VIX) also increased by 3.78 points after Powell’s speech, which was only ten minutes long. The VIX volatility indicator and the Nasdaq volatility have both displayed variations with similar patterns. According to recent research, the markets for cryptocurrencies and bitcoin have a stronger correlation with equity markets than at any other time in history.
Back in May 2022, experts from Arcane Research brought attention to the correlation by saying, “Bitcoin’s correlation with the S&P 500 likewise continues to grind upwards, currently sitting at 0.59, again close to an all-time high.” This statistic was used to emphasize the correlation. Bitcoin (BTC) is currently trading at a price that is 71% lower than its all-time high (ATH), which was recorded on November 10, 2021, and ethereum (ETH) is trading at a price that is 69.6% lower. In the course of the last three bear markets, the price of bitcoin has fallen by more than eighty percent from its all-time high, while the price of ether has fallen by ninety percent relative to the value of the US dollar.
According to a Market Strategist, Equities Markets Could Experience a 50 to 60 Percent Drop in Value
To make matters even more dire, a sizable percentage of market strategists, analysts, and investors are of the opinion that global markets will continue to deteriorate. During a recent interview with David Lin of Kitco, the main strategist at bubbatrading.com, Todd ‘Bubba’ Horwitz, stated that the stock markets could fall by another fifty percent from their current levels. Horwitz explained his prediction by pointing to the Federal Reserve’s decision to raise interest rates in the midst of what a lot of people think is a recession. Horwitz went on to mention that the financial maneuvers may have some sort of connection to the contentious Great Reset. “[The United States Federal Reserve ] increasing interest rates despite the ongoing recession,” Horwitz explained to Lin. “In all of recorded history, this has never been attempted… There is a political purpose hidden behind everything that is currently taking place, and that agenda is to try to bring about the “Great Reset.” In addition to this, Horwitz emphasized: During his presentation at the Jackson Hole Symposium in Wyoming, Horwitz also discussed Powell’s commentary. The market strategist observed, “[Powell’s] statements are those of a fool,” referring to Powell’s statement at the Symposium from the previous year in which he claimed that inflation was just temporary.
According to Horwitz’s interpretation, Federal Reserve Chairman Jerome Powell is “trying to run away from what is about to happen, which is going to be hyperinflation.” “Wait till the price of oil begins its meteoric ascent all over again. If that is the case, what do you anticipate will happen with inflation? This year is going to be tough because there won’t be enough food. The analyst went on to say that there will be food riots in a number of different countries. During his presentation at the Jackson Hole Symposium in Wyoming, Horwitz also discussed Powell’s commentary. The market strategist observed, “[Powell’s] statements are those of a fool,” referring to Powell’s statement at the Symposium from the previous year in which he claimed that inflation was just temporary.
According to Horwitz’s interpretation, Federal Reserve Chairman Jerome Powell is “trying to run away from what is about to happen, which is going to be hyperinflation.” “Wait till the price of oil begins its meteoric ascent all over again. If that is the case, what do you anticipate will happen with inflation? This year is going to be tough because there won’t be enough food. The analyst went on to say that there will be food riots in a number of different countries. The analyst working for bubbatrading.com came to the conclusion that the equity markets are going to suffer, but that there is still the potential for some opportunity value in the commodity markets. Horwitz stated that they anticipate an overall haircut of between 50 and 60 percent in these equity markets. “Overall,” “If anyone looks at their own finances, they can certainly see that it is difficult times, and they are watching how much money they spend,”