Financial markets were turned upside down last week by the biggest market crash since 1987, and cryptocurrency news was also reflected in that. In this episode of Madelon Pratt, Madelon discusses the causes and consequences of this historic event.
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Global shock wave as stocks and cryptocurrencies collapse
The collapse began in Japan, where the Nikkei suffered its biggest drop since Black Monday in 1987. The shock quickly spread to other markets, including the US S&P 500 and European stock markets. The reason? An unexpected interest rate hike by the Bank of Japan, known as the “”yen carry trade“annoyed.
The yen carry trade, in which investors borrow cheaply in Japan to invest elsewhere, has proven to be an important mechanism in global financial markets. The sudden turmoil has led to massive sell-offs and a domino effect in many markets, including the cryptocurrency market, where Bitcoin (BTC) has fallen 17 percent.
Multiple factors caused the collapse.
In addition to the Japanese shock, other factors also play a role:
- US Unemployment Rates: Rising unemployment rates have raised fears of a recession.
- Volatility Index (VIX): The “fear index” has reached its highest level since 2020, indicating extreme uncertainty in the market.
- Central banks: The reactions of the Federal Reserve and other central banks are being closely watched. There is speculation about possible interest rate cuts to stimulate the economy.
In her latest video, Madelon delves into several crucial aspects of this market meltdown. She discusses the role of the Bank of Japan and its unexpected policy shift, as well as the responses of other central banks around the world. Madelon also analyzes the impact on various market sectors, including stocks, bonds, and cryptocurrencies.
It also highlights interesting developments such as the recent US government purchase of $35 billion in government bonds and the potential consequences for market liquidity. It also pays attention to growing concerns about a potential recession and how investors can anticipate it.
Of course, Madelon also takes a look at the price of Bitcoin (BTC).
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