Trad and crypto markets plunging as dollar climbs steadily

Table of Contents

• The Fed brings markets down on threats alone

World markets are taking a tumble right now. Practically all asset classes are down. Which stocks, commodities and cryptos will survive this potentially extremely heavy downturn?

Red is the colour across world markets with very few exceptions. The DXY, an index that measures the US dollar against a basket of other fiat currencies, is still steadily green, and the Russian ruble, 3.2% up, has completely recovered the losses sustained at the beginning of the invasion of Ukraine.

The Dow Jones index is down 4.7% over the last 2 days, the Hang Seng Index is down 12% over the week, and the Nasdaq, the tech stocks index, is down 8.5% over the previous week.

In the commodities sector, the metals are also faring badly. Gold is down 4.65% over the last 6 days, while silver has been absolutely slammed for more than 10% over the same period.

The Fed brings markets down on threats alone

Jerome Powell, the chairman of the Federal Reserve has got his wish to bring markets down, and so far, it has only taken a 25 basis point interest rate hike, plus lots of chat on how the Fed will raise strongly over the next few months.

If this is all it takes for the markets to start crashing, then it can only be imagined how bad things could get when the Fed actually starts raising, rather than just talking about it.

It might also be wondered just how far the Fed will get with the interest rate hikes before saving the markets from oblivion actually becomes more important than trying to do something about inflation.

As for crypto, bitcoin has been down as much as 11% since a local high 5 days ago. Currently it is sitting on the $39,000 support, and all eyes are on whether this will hold. A possibility of $30,000 is on the cards if it doesn’t.

It could be argued, at least in the case of crypto, gold and silver, that this is all short to medium term price action, and that in the long run, these assets are bound to attract investor funds. 

They are all sound money that, in theory, cannot be manipulated by governments. Gold and silver have had this utility for centuries, but over recent decades the paper markets have allowed for massive price manipulation. 

However, bitcoin is mathematical, and in spite of the SEC allowing a futures market for the asset, much to the disadvantage of the retail investor, just holding the asset could be advantageous over the longer term, as fiat currencies continue their descent to zero.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice