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The Chinese stock markets are reeling under tremendous pressure as Coronavirus deaths doubles over the weekend. Currently, it seem like the virus is contained in China only as the statistics reveal affected patients only in China. It has infected more than 14,000 people and claimed 305 lives – all but one inside China.
A pandemic scare seems to growing as countries all over the world are blocking passengers from China.
Economically, it a recipe for disaster, the Chinese markets opened with a 8.2% drop on it’s composite index equivalent of S&P500. Furthermore, Dovey Wan, leading crypto analysts noted,
UPDATE: SHA index is down over 8% , STAR Market (similar as NASDAQ to some extent with loosen profitability requirement to get listed in mainland) is also hit badly
The ripple effect of the virus on the economy is being felt across all assets, including gold and Bitcoin; which are supposed to act as safe haven.
Nevertheless, this the one of the rare times when a pandemic scare from the virus along with plunge in stock market has not shot the price of gold up. It pulled back from above $1592 to $1580 at opening. This could be due to the fact that commodity futures are down as well.
China Prints more Money
The Central bank of China, PBOC attempted to slow the downfall, by attempting a quantitative easing measure of injecting 12 Trillion RMB ~175 Billion USD liquidity in trading. Wan notes,
Abusing the modern central banking monetary tool is the only consensus among all world politicians, regardlessly of any political system
In the coming months, the economic output of the country is expected to be strongly affected. Hence, the economic control measure could fall on its face with rising debt.
Will Bitcoin and Gold Rise or Printed Money Drive Stocks?
Currently, the markets are at a tipping point as investors could flock to hard assets and commodities like Gold.
Wan cites that how negative sentiments of Chinese investors is affecting crypto markets and Bitcoin prices as well. She tweeted with an update after the opening,
and Bitcoin meanwhile … The retail investors profile of Chinese A shares and crypto is largely overlapped, which makes the two time each other quite often
Do you think a positive pullback of the stocks could favor Bitcoin as well? Please share your views with us.
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