US President Trump tariff imposition on Chinese imports resulted in the stock market fall with the Dow Jones down losing about 1,175 points. It only fuels the shift towards the greener crypto market which is being the source of wall street attention increasingly.
Trump “trade war” leads to stock market fall
The US President Donald Trump’s “trade war” with China didn’t turn out good at all. Recently, Trump issued an order to the US Trade Representative, Robert Lighthizer to impose at least $50 billion tariffs on the Chinese imports while telling the reporters “This is the first of many.”
On Thursday, in White House, Trump signed an executive memo that laid down the instructions pertaining to USTR to come up with a list of products that should face higher tariffs within 15 days.
Apparently, Trump took a big gamble that ended up escalating the tense trade relations between China and US that resulted in a plunge in the value of stock all over the world.
This “trade war” has the broader equity market running amok while the steel and aluminium stocks get trumped. A global market sell-off that has been occurring got accelerated all thanks to Trump’s trade tariffs.
At one point, the Dow Jones Industrial Average took a plunge of about 1,600 points and settled at 24,346 with a 4.6 percent low that is 1,175 points. This was the largest one day point drop that Dow ever experienced which has the Wall Street all rattled.
For the past two months, the stock market has been experiencing a downward trend and a terrible week that escalated into the most horrible day.
In January, the Dow Jones was at its highest at 26,000 that dropped down to 23,000 while wiping down billions during the process.
How to benefit from global events?
CNBC carried out a study in February 2018 that concluded on a 90-day basis, the correlation between the daily percent returns of the cryptocurrency and the S&P 500 were 33 percent. Another study was conducted by learncryptoinvesting that suggested a positive correlation between cryptocurrency market and bitcoin seen as gold standard equivalent. But both these studies were done for a particular defined short period of time and it was viewed as an extended effort to signal a correlation that never existed.
Tom Lee sums it up in a bold, no-nonsense manner:
“Cryptocurrencies have their own economy based on activity on that Blockchain. Equities have their own economy based on earnings per share multiples. The institutional overlap is essentially zero.”
So as is evident there is not much proof available for correlation between stocks and cryptocurrencies but there are always chances when one market is behaving opposite of other and you can leverage this to earn profits. Since we are talking about both stocks and cryptocurrency keeping a close look on the both can be rewarding. The smart players in a market never invest their funds into a single portfolio or category of stocks rather they diversify in a number of markets that include the crypto market as well.
What are your views on the stock market fall? Do you think it will lead to a shift towards cryptocurrency market sooner than later? Share your thoughts with us!