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- Bitcoin shows resiliency as financial markets struggle to keep afloat
- Inflation pressures, monetary policy changes, interest rates weigh on sentiment
Bitcoin Stays Elevated After the Elon Musk Effect
Bitcoin remained strong on Tuesday amid a global equity market selloff. The decline in worldwide shares saw US stocks suffer their worst day since May.
The price of bitcoin, known for its heightened volatility, experienced a slight pullback but was quick to snap its losses and recover. The orange coin closed yesterday’s session at levels around $41,700, or a drop of about 2% on the day.
Early on Wednesday, however, bitcoin was back above $42,000 per coin, with an intraday high of $42,400. The original cryptocurrency was supported by comments from Tesla CEO Elon Musk, who appeared at the Code Conference in Beverly Hills.
The billionaire entrepreneur said the US government should consider abandoning its plans to regulate bitcoin and cryptocurrencies. “I would say, ‘Do nothing,’” Mr. Musk commented. He also said he believes it is not possible to destroy crypto, but “it is possible for governments to slow down its advancement.”
Wall Street Stocks Endure a Steep Decline
In the meantime, Wall Street endured a heavy selling wave yesterday with sharp losses across the board. As the “buy-everything” rally recently ran out of breath, traders and investors were now largely looking to cash out.
The technology-heavy Nasdaq Composite was the biggest decliner on Tuesday. Thus, the index lost 423.29 points, or 2.83%, to finish the day at 14,546.68. Next, the S&P500 dropped 90.48 points, or 2.04%, to 4,352.63. In addition, the 30-stock blue-chip Dow Jones Industrial Average shed 569.38 points, or 1.63%, to 34,299.99.
Looming Risks Ahead
Increasing uncertainty is casting a shadow over the continued progress of economic expansion. Firstly, persistent inflation is threatening to hurt consumer spending. Confidence among US consumers fell in September for the third straight month, data showed yesterday.
The consumer-confidence index fell to 109.3, far below expectations for 114.9. The drop indicated US consumers are wary of making big-ticket purchases such as homes and cars.
Secondly, since the US Federal Reserve announced last week it is preparing to unwind its monetary support, stocks have stalled. Concerns about short-term and medium-term growth prospects have increased, causing investors to retreat their risky bets on shares. The US central bank also said it is looking to raise interest rates at least three times by 2023.
In Washington, Treasury Secretary Janet Yellen urged Congress to take action to raise the debt ceiling. Otherwise, she warned, the US will run out of cash and is facing default by Oct. 18.
Global stocks slipped broadly on Tuesday. Everywhere across Europe, stocks turned lower for the day. The pan-continental Stoxx 600 dropped 2.18%.
What to Watch for Today
On Wednesday, opportunities may be present in stocks that were hurt the most during yesterday’s selloff. Facebook, Microsoft and Google parent Alphabet each lost 3.6% or more on Tuesday. GameStop erased more than 10%, while AMC Entertainment dropped almost 6%. US stock futures rose modestly, suggesting the major indexes could try to pare back some losses.
In currency markets, the US dollar has been pushing higher against the Japanese yen for a sixth consecutive day. The current exchange rate near 111.70, however, is proving difficult to break as bears are increasing the selling pressure.
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