A brief panic episode following an announcement by Janet Yellen caused the markets to close the day with red candles all over the area.
In a videoconference using The Atlantic, Janet Yellen, the U.S. Treasury Secretary, signaled that Joe Biden’s administration may be aiming to raise interest rates as a way to conserve the market after the imbalance caused by steps to fight the Coronavirus pandemic.
A *Not SoGood Idea
When asked about what activities would be about the table to stimulate the market in the aftermath of the catastrophe, Yellen clarified they had been considering reallocating some investment and changing some policies, adding that interest rates may climb shortly. She was, however, emphatic in pointing out that any change could be modest.
It may be that interest rates might need to rise marginally to be certain our economy does not overeat, though the extra spending is relatively small relative to the size of the economy. Therefore it may cause some very modest gains and interest rates to receive that reallocation. However, these are investments our economy has to be aggressive and productive.
Generally, when interest rates go up, investments in fixed income products become more appealing. Additionally, they tend to absorb more capital from those moving out of other assets such as gold or cryptocurrencies due to their low volatility.
Bitcoin and Other Markets Dump After Yellen’s Statements
Reactions to Yellen’s words did not take very long to follow. The cryptocurrency market dropped from nearly $2.3 trillion to $2.1 trillion in just two hours. After a small recovery, it’s presently in the $2.2 trillion zone.
Bitcoin fell back below $55K, losing $3500 in 6 hours, putting it once again under the 50-period EMA –that may signal bull tiredness — and canceling out the gains of the previous 5 days.
Other cryptocurrencies also sensed the pain. ETH went . 58%, BNB lost nearly 10percent of its cost, XRP dropped 10. 74 percent, ADA dropped 6. 38%, and DOT dropped 6.7%. Dogecoin was the sole major altcoin that sailed against the tide and remained at a staggering 26. 35% profits. WoW, Much Green.
The rest of the markets did not take the news either.
The S&P 500 immediately fell more than 1.3%, but was able to recovery just a little bit, closing the day with a red candle of 0. 67%. This would be the first time since March 25 that the index closes below the EMA50. Tomorrow wil be crucial to ascertain whether the index goes sideways or that was just a panic attack.
The Dow Jones also fell 1. 31% throughout the day, but was able to retrieval and shut with a 0. 06% increase in the last 24 hours, demonstrating that this could be nothing but an overreaction from the markets.