Abstract : The global financial markets were shocked and lost more than $1 trillion this Monday. While the most active Bitcoin futures contracts and Bitcoin spot price at the largest cryptocurrency exchange in US all hit the highest in nearly nine and a half months.
May 14 (ChainDD) As trade war between US and China escalated, the global financial markets were shocked and lost more than $1 trillion this Monday. US stocks and other risky assets all suffered sellout and safe haven assets such as US Treasury, Japanese fiat currency yen, gold and Bitcoin jumped since investors are seeking safety.
On May 13 EST, Three major US stock indexes all recorded their biggest daily losses since the beginning of this year. The Dow Jones Industrial Average fell nearly 620 points, or more than 2%, the same percentage loss with the S&P 500. The Nasdaq Composite declined over 3%. The Cboe Volatility Index (VIX), so-called market’s fear gauge, soared almost 30% in a day to the highest in more than three and a half months.
As of last Friday, the US stock market has been wiped about $90 billion in week and US equity funds witnessed outflows of $14 billion, the biggest weekly outflows since January, 2019.
Risk aversion sentiments fueled advance of assets have haven characteristics, especially Bitcoin.
The yield on the benchmark 10-year US Treasury note surged, moving inversely to price, dropped below %2.4%. The most active contract of COMEX gold futures rose above $1300 per ounce for the first time in about one month.
The most active Bitcoin futures contracts of two major U.S. futures exchanges- CME Group, the largest futures exchange in the world, and Cboe, the largest option exchange in US, approached $8000, with the highest close since July 30, 2018 and a rally of about 20% as their eleventh consecutive surge.
Bitcoin spot price at Coinbase, the largest cryptocurrency exchange in US, topped $8100 intraday, hitting the highest in nearly nine and a half months.
Driven by Bitcoin and other cryptocurrencies, US listed blockchain shares countered the bearish trend and outperformed the major stock index. Riot Blockchain closed more than 10% and Marathon Patent jumped nearly 16%.
China’s Retaliatory Tariffs and Hard Line Stance Triggered Safe Haven Buying
On May 13 BJT, China’s State Council announced it will impose new tariffs on more than 5000 products imported from US ranging from 5% to 25%. The tariffs will take effect June 1 and impact $60 billion US imports.
At that day’s nightly news program produced by China Central Television (CCTV), the announcer rarely took more than one minute in the thirty-minute long program to report Chinese government’s strong position on trade war with US. “Whether the US wants to talk or fight in the next step, or take other action, China has already fully prepared its policy toolbox and prepared a comprehensive response,” the announcer said.
Such official hard line message transmitted through the report, right before US stock market opened, was paraphrased by The Wall Street Journal and other mainstream US financial and business media.