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US stocks decline $1.25T in a single day, more than the total crypto market cap.

28-Aug-2022 By: Shikha Jha
US stocks decline $1

As Fed Chair Jerome Powell maintains his unwavering hawkish stance on inflation and monetary policy, risk assets suffer significantly.

On August 26, after the United States Federal Reserve made aggressive comments on economic policy, Bitcoin (BTC) and altcoins suffered significant losses. Risky assets suffered significant losses across the board; U.S. equities lost $1.25 trillion in a single session.

Powell's rhetoric about "soft landings" is being retired, according to an analyst

Investors rushed to reduce risk as comments from Fed Chair Jerome Powell hinted that larger rate hikes were still very much on the table despite recent data suggesting that inflation was already slowing. "Maintaining a restrictive stance on policy for some time will probably be necessary to restore price stability. The historical evidence strongly advises against easing policy too soon "At the yearly Jackson Hole economic symposium, Powell remarked.

The S and P 500 touched its lowest levels since late July as it concluded the day down 3.4%. The Nasdaq Composite Index followed the trend and decreased by 4%. In all, the U.S. stock market lost more money than the aggregate market capitalization of Bitcoin and all other cryptocurrencies.

According to data from CoinGabbar, the overall crypto market cap itself dropped from $1.029 trillion to $938.87 billion at one point overnight, signifying a decline of 8.85%. While some claimed that Powell's remarks should not be taken into account when determining the direction of the Fed, others observed that old theories about the inflation outlook were gradually being disproved.

Holger Zschaepitz, a well-known market analyst for the German newspaper Die Welt, thought Powell "skipped the dovish ones" and hit "all the hawkish notes" in his speech. In part of his Twitter comments, he stated, "The hawkish features were his recognition of the pain that is likely needed to lower inflation - no more soft landing, the signal that rates will need to be taken above neutral."

Powell said that it would "depend on the totality of the incoming data and the developing outlook" to decide how much to raise key interest rates in September. According to the most recent results from CME Group's FedWatch Tool, a 75-basis-point increase in rates in September, similar to the July action, is supported by the majority of respondents.

There is no way to conceal the agony.

However, there was no way for cryptocurrency investors to escape the immediate effects of the risk asset rout.

BTC/USD had a loss of up to 8.8% at one point, falling below $20,000 for the first time since July 14, before bouncing back to cling to the important line in the sand. The situation for altcoins was just as bad. The largest altcoin by market size, Ether (ETH), had intraday losses of close to 14%.

At the time of writing on August 27, ETH/USD was around $1,500, wiping out profits for the entire month. A new warning from well-known trader Crypto Ed, who anticipated a potential next move down, was among price takes.

Could fall to $1200–1300 before experiencing a meaningful bounce

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