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Market Volatility Strikes Back
Only a handful of hours ago, crypto markets were buoyed as the Securities and Exchange Commission signaled its intent to dismiss a lawsuit against Coinbase (COIN). The welcome regulatory news sparked 5% gains for COIN and the likes of increasingly important crypto trading platform Robinhood (HOOD), and sent bitcoin (BTC) breaking out of its recent tight trading range to within sight of the $100,000 level.
The Good, the Bad, and the Ugly
The first bomb to break the good vibes came late in the U.S. morning when Bybit was stung by about a $1.5 billion hack – the largest such exploit ever in crypto. That news sent bitcoin and ether (ETH) sliding roughly 2% in a manner of minutes.
Prices quickly seemed to stabilize and – at least in the case for bitcoin – bounce a bit.
Et tu Stocks?
Any sort of bounce, however, was quickly snuffed out as modest losses for U.S. stocks began to accelerate in afternoon trading.
Among the excuses for the quick retreat was a poor reading from the Michigan Consumer Sentiment Index, which unexpectedly slipped to 64.7 versus forecasts for 67.8. The same survey’s inflation expectations rose to 3.5% against an expected 3.3%.
An outlier, but perhaps also a reason for selling, was a new coronavirus scare out of China. Discovered by researchers at the Wuhan Institute, HKU5-CoV-2 is “strikingly similar” to the virus that caused the 2020 pandemic, according to the Daily Mail.
The Market Response
Shortly before the close of trading on Friday, the Nasdaq is lower by 2.2% and the S&P 500 by 1.7%. The 10-year U.S. Treasury yield has fallen nine basis points to 4.42%.
As for crypto, bitcoin has more than erased its gains of the past couple of days, trading back to $95,000 and lower by nearly 4% over the past 24 hours. Ether (ETH) has pulled back to $2,650, also lower by about 4%. The broader CoinDesk 20 Index is down 4.4%.
Conclusion
The market can be a volatile and unpredictable place, and sometimes even the best news can be quickly undone by unexpected events. The recent hack of Bybit and the disappointing consumer sentiment survey and coronavirus scare in China are just a few examples of the types of events that can quickly turn the tide of market sentiment. As investors, it’s essential to stay informed and adapt quickly to changing circumstances.
FAQs
Q: What is the significance of the Bybit hack?
A: The hack of Bybit is significant because it is the largest cryptocurrency exchange hack in history, with losses estimated at $1.5 billion.
Q: What is the impact of the consumer sentiment survey on the market?
A: The poor reading from the Michigan Consumer Sentiment Index may be contributing to the recent market volatility, as it suggests that consumers are becoming more cautious and less optimistic about the economy.
Q: What is the significance of the new coronavirus scare in China?
A: The new coronavirus scare in China is significant because it has the potential to spread globally and cause widespread economic disruption.
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