Chinese stocks took a plunge last night and posted their biggest loss in three decades. Investors are hoping that it’s not indicative of a deepening problem.

Panic has been hitting the world’s second-largest equity market as of late.

The Shanghai Composite Index slumped -2.8 percent last night — the worst end to the Lunar Year on record.

Chinese Stocks Falter as World Watches

According to Bloomberg, around 90 percent of mainland’s 4,000 public stocks dropped with trading volume up 20 percent across the board. Foreign traders also sold a record $1.7B in shares and the yuan slipped slightly, being down -0.4 percent.

The string of events was unexpected but has largely been linked to the hysteria surrounding the Wuhan coronavirus. China has quarantined two cities thus far as it struggles to contain the outbreak — which is now spreading to the rest of the world. However, there are also indications that other financial issues are at play beside the disease hysteria.

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Nonetheless, the issue is strange given that the Chinese New Year is usually a time of stock rallies. Despite this being a time of higher consumer spending in China, stocks associated with consumer-staples were hit hardest as a result of the panic yesterday. This could consequently end up being one of the most serious tests to President Xi’s government in recent memory.

Bitcoin Falters Amid Global Unease

As China slips, the world economy remains on edge as markets posted relatively anemic trading yesterday. Bitcoin was no exception, slipping downward by around -2.5 percent. It is currently trading at around $8,450.

Although Bitcoin is often characterized as a hedge against global chaos, this has not been backed up by historical trends. In fact, it’s been determined again and again that Bitcoin’s price tends to follow the S&P 500. In order words, a healthy stock market means that Bitcoin will see healthy price growth.

That’s what makes the panicked Chinese stock market so concerning — it could cause a domino effect that could severely impact world markets. The end result would destructive not only for the S&P500 but also for Bitcoin (BTC).

All eyes are on China now as it looks to regain the losses it recently incurred. However, the panic likely won’t subside completely until the Wuhan coronavirus is fully under control.