Good morning, US stock indices and crypto assets made a comeback on Thursday morning (8/9/22) after being battered the day before. What happened?
US Stock Indices
- The value of the trio of US stock indices made a triumphant return on Wednesday (7/9) after sinking the day before.
- The Dow Jones Industrial Average (DJIA) increased 1.4% in value, while the S&P 500 and Nasdaq grew 1.8% and 2.1% respectively.
- The agile movement of technology stocks supported the Wall Street index yesterday. The value of Microsoft and Google shares, for example, shot up by more than 2% after US government bond yields began to flatten.
- For years, the performance of technology stocks has been negatively correlated with US bond yields. This is because investors always compare the returns of US government bonds, which are low-risk assets, with growth stocks, which have a high-risk profile.
- Meanwhile, Apple’s share value jumped more than 1% after the company announced its new product lineup including the iPhone 14, iPhone 14+, and iPhone 14 Pro Max.
- After experiencing a fire yesterday, crypto assets returned to blossom on Thursday morning.
- Launching Coinmarketcap at 06.58 WIB, the 10 largest markets capitalized crypto assets in the world landed in the green zone in the last 24 hours.
- The value of Bitcoin (BTC), for example, jumped 2.41% in the past day and now lands at US$19,290 per piece. Meanwhile, the value of Ether (ETH) grew 4.36% to US$1,629 per piece at the same time.
- Other altcoins are also showing off their positive performance. Cardano (ADA) and Dogecoin (DOGE) grew more than 3% in value in the last 24 hours. Then, there are also Polkadot (DOT) and XRP, which climbed more than 4% at the same time.
- In the ranks of major crypto assets, there is Binance Coin (BNB) which is the main star after posting value growth of 6.28% in the past day.
- This time, the good performance of crypto assets is believed to follow the pace of the US stock index which was green in yesterday’s trading session.
- For your information, the price movements of crypto assets are closely related to the steps of the Wall Street index. The reason is, that investors always look at the US stock index as a reference in seeing the risk appetite of investors in general.
- In addition, the flashy performance of crypto assets this morning was also due to the weakening of the US Dollar index. For your information, the value of the US Dollar index slipped from the 110 level yesterday to 109 in the early hours of this morning.
- Market participants will certainly release the US Dollar and switch back to crypto assets when the attractiveness of the greenback’s value fades.
- Moreover, according to the latest data, the correlation level between the US Dollar and crypto assets has now reached -0.77. In other words, the two have a near-perfect negative correlation, aka -1.
- In other news, the popular crypto exchange platform Binance will provide ETH staking services with a yield rate of 6% per year. This became possible after the Ethereum network will change its consensus mechanism from Proof of Work to Proof of Stake in this month’s network update.
- The idol in the crypto market this morning went to Helium (HNT), which saw a 47.57% growth in value in the past day. Helium’s value shot up after the protocol submitted a proposal to move its main activity to the Solana network.
- In addition, there was also the value of Voyager (VGX), skyrocketed by 30.27% at the same time.
- Gold prices on the spot market were at US$1,717 per ounce at 07:23 GMT, up from US$1,695 per ounce in the same period yesterday.
- The value of the precious metal is getting stronger after the value of the US Dollar is weakened. Just so you know, the decline in the value of the US Dollar will make the price of gold cheaper for market participants who rarely transact using the currency.
Crypto assets have collapsed due to the Fed’s increasingly visible signals of tightening monetary policy.
Performance of Major Crypto Assets in the Last Day (excluding stablecoins) Coinmarketcap data as of Sept. 7, 2022
The crypto market is also experiencing the same condition. Launching Coinmarketcap at 15.19 WIB, the 10 crypto assets with the largest market capitalization globally have sunk into the red zone in the last 24 hours.
Just like this morning, the weakening of crypto assets this time was also caused by the increasingly powerful value of the US Dollar. Just so you know, the value of the US Dollar index this afternoon is still above the 110 level.
Market participants will certainly exchange their crypto assets for US Dollars if the value of the greenback asset looks more tempting. As a result, the value of crypto assets fell.
But at the same time, market participants are also staying away from risky markets, including the crypto market, because the Fed’s benchmark interest rate hike signal is getting thicker. Cuan pals can find the influence between the Fed’s interest rate hike and the performance of crypto assets.