In yet another red start of the week for the stock market, Wall Street slumped about 5% as the opening bell rang and wiped out most of yesterday’s gains.
Even the prospect of a $1.2 trillion stimulus package that includes at least $1,000 to every American adult, couldn’t prevent Dow to drop 6%, S&P 500 to 5.24%, and Nasdaq to 4%. Even gold is getting sold-off, currently down 1.07% at $1,509.40 an ounce.
The fear among investors about the coronavirus pandemic is having a devastating impact on the market. The sell-off came after Treasury Secretary Steven Mnuchin privately warned lawmakers that the US unemployment rate could surge to 20% if the Fed didn’t take sufficient action.
Surprisingly, Bitcoin rose 2.17% as it traded north of $5,400, today at one point.. Altcoins followed the leading digital asset and recorded gains with Dash leading the pack by seeing an increase of 9%.
As the Fed proposes the trillion-dollar program, economist Claudia Sahm, former top Fed advisor said “They need to go big, and they need to go now. I don’t want to see anything less than $1.5 trillion,” she said.
Sahm said “this recession looks like a very serious one,” and likely to be “twice as deep” as the Great Recession.
However, Changpeng Zhao, founder and CEO of crypto exchange Binance said, what they need instead is for the governments to stop printing money, investigate financial fraud, hold failed executives accountable, and put bad actors behind bars.
“People have figured out how to game the system long ago. Bitcoin fixes this. No printing possible,” said Zhao.
Bitcoin proponent Andreas Antonopolous who predicted earlier this year that initially Bitcoin will fall hard said any of government tactics won’t work.
“First 0 interest, then QE Infinity. Then negative rates and currency controls, then cash limits and helicopter money. Then e-coin and cash ban. None of it will work…”
In the past month, bitcoin dropped along with stocks and other risky assets, putting its status of being digital gold and safe haven asset into question. However, economist and trader Alex Kruger said, “nothing wrong in BTC moving up and down with risk assets in such a black swan event.”
Also, as industry experts have been saying Bitcoin is a hedge against the central bank and fiat devaluation and not economic turmoil.
And now that central banks are launching the fiscal stimulus with no holds barred, we will soon fly. “Prepare for the worst economic crash since the Great Depression. Sell stocks and fiat currencies while they still have some value. Buy Crypto and Gold. Do it now. Trust me. This is not a drill,” said Kim Dotcom.
Litecoin founder Charlie Lee also shared, “I used to think that a Bitcoin ETF will kickstart the next bull market. I was wrong. Joe Sixpack will unfortunately get hit very hard due to the aftermath of the coronavirus and the central banks will keep on printing money. Joe will wonder if there’s a better way. There is.”
Industry experts basically expected central banks pumping money into the financial markets to push bitcoin prices higher.
“Those packages are bullish for the price of bitcoin in both the short and long term. In theory, the best case scenario for BTC is a world where governments overspend and lose control,” Kruger said.
Not to forget that gold has been getting sold-off over the past week as well as it did during the 2008 financial crisis. But as the dust settled, the bullion exploded and “the same will happen with both assets (bitcoin and gold) this time.”