All eyes are on Asia for another day as markets across the globe brace for the fallout of another stock rout. Cryptocurrency asset markets, however, remain buoyant, holding on to gains made over the past week.
The kind of volatility usually expected on cryptocurrency markets has started manifesting itself on stock markets as investors brace for more stormy weather. Bitcoin and its brethren, on the other hand, have been relatively stable and have even made gains during the coronavirus outbreak.
Stocks Down Crypto Up
A round of worsening headlines from China had deflated any gains on the Dow yesterday. [CNBC] Head of equities and derivatives strategy at BTIG, Julian Emanuel, said:
“The market is a wild animal right now, it could go up huge or it could go down huge, but the key is how do stocks react to the massive amount of incoming news over the next several days.”
He added that there could be a huge selloff and expects a lot more volatility in the days ahead.
Goldman Sachs forecast more doom and gloom with economists Monday stating they expect the coronavirus outbreak to reduce Chinese GDP growth in the first quarter of 2020 by 1.6 percentage points, while global growth could be further impacted by 1 percentage point.
Chinese stocks plunged 8% yesterday according to CNN which reported on the Shanghai Composite and the Shenzhen Component Index dumping hard on their first day of trading after an extended Lunar New Year holiday. The losses wiped out a combined $445 billion in market value, over double the total market capitalization for Bitcoin. Meanwhile, in cryptocurrency, exchange tokens lead the charge in gains for January, as BeInCrypto has previously reported.
China’s currency also fell with the yuan sinking 1.6% in onshore trading, dropping below 7 to one US dollar. In ongoing efforts to buoy the financial system the People’s Bank of China pumped 1.2 trillion yuan back into the markets yesterday. This is higher than Bitcoin’s total market cap at current prices.
Cryptocurrency Markets Stable
Total cryptocurrency market capitalization is currently $260 billion which is up 36% since the beginning of the year when it was around $190 billion.
Bitcoin is holding steady in the mid-$9k price range where it has been consolidating for a week. Analysts expect further gains as world economic woes intensify and BTC fundamentals, such as the halving less than a hundred days away, strengthen.
Ethereum has also been bullish this year with a gain of 46% since January first.