Black Monday redux: Bitcoin, stocks and gold see heavy losses as VIX surges to 65
Monday’s price action across financial markets was one for the record books - though not in a good way - as asset prices fell across the board following a sharp downturn in Japan’s Nikkei, which sent negative reverberations across global markets.
“The recent turmoil in the Japanese stock market, which saw the Topix index record its most significant two-day decline since the 2011 tsunami, marks a severe reversal from its record highs in July,” said analysts at Bitfinex. “This downturn was triggered by the Bank of Japan’s unexpected rate hike on Wednesday and the hawkish tone adopted by Governor Kazuo Ueda, plunging both the Topix and the Nikkei 225 into a technical correction.”
“Simultaneously, Wall Street experienced a deepening of losses on Friday, August 2nd, with a significant decline in US equities and Treasury yields reaching multi-month lows,” they added. “This was spurred by a disappointing jobs report, intensifying concerns that the US Federal Reserve has delayed interest rate cuts, thereby heightening the risk of a more pronounced economic slowdown in the US.”
“These events underscore the fragility and interconnectedness of global financial markets, highlighting how policy shifts and economic indicators can precipitate rapid changes in investor sentiment and market dynamics,” the analysts said. “Economic and political developments are exerting significant influence across all markets, not just cryptocurrencies.”
The knock-on effect of Japan’s economic struggles on global markets has been severe, as evidenced by the declines seen in the U.S. markets on Monday. At the closing bell, the S&P, Dow, and Nasdaq all recorded significant declines, finishing the day down 3.0%, 2.60%, and 3.43%, respectively.
“This broader market instability has also led to notable downturns in stock markets, indicating a widespread impact of current global events,” Bitfinex analysts said. “Since BTC and the SPX have experienced positive correlation since mid-July, we expect the oscillating nature of the correlation to play out and the correlation across risk assets to increase moving forward. However, if the stock market continues to be plagued by downside, it is increasingly likely that BTC might continue to face downward pressures in such a scenario.”
Even the established safe-haven assets of gold and silver fell under the weight of declining sentiment, trading down 0.80% and 3.79% respectively at the time of writing.
Data provided by TradingView shows that Bitcoin (BTC) broke below support at $59,000 in the early hours on Monday and fell to a low of $49,053 before dip buyers arrived in force and pushed it back above $54,000.
At the time of writing, Bitcoin trades at $54,046, a decrease of 8.19% on the 24-hour chart.
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