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Things are becoming more difficult for Wall Street investors who insist on the bullish economic argument.
Stocks had their worst week since the regional bank crisis 2023 as traders across risk assets were roused from their slumber by troubling data that had been predicted for some time in the bond and commodities markets.
A bout of caution in global markets last week spilled across into cryptos.
As investors around the world shied away from riskier assets due to the gloomy economic outlook, Bitcoin came close to hitting a one-month low last week.
On Friday, as digital assets were swept up in a tumultuous trading day across markets following poor US employment data, Bitcoin and other cryptocurrencies plunged, wiping out earlier gains.
After the employment data, Bitcoin rose 1.6%. But the cryptocurrency's price took a sharp turn for the worst roughly an hour later.
Bitcoin reached its lowest price since August 5th, falling 4.5% to around $53,555. The second-largest cryptocurrency, Ethereum, fell over 6%.
Swap traders have increased the odds that the Federal Reserve will announce the first rate cut in almost four years—a half percentage point, or 50 basis points—when it meets later this month.
However, soon after, traders reconsidered whether the latest jobs data warranted such a steep discount.
After recovering from the early August slump, traders gave in to growth worries due to a depressing string of economic reports, most notably from the labour market.
Cryptos slumped, credit spreads widened at their quickest pace since early August, the S&P 500 plummeted for four days in a row, and an index of computer chip makers sank 12%, the worst drop since the 1987 crash.
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The gyrations are just a temporary setback in the bullish trends, and risky assets are still pricing in a relatively gentle landing for the future, given that the US stock benchmark, the S&P 500, is still up 13% this year.
However, there was unusual harmony among investors across asset classes in the trading activity, especially on Friday.
One indicator suggests that their level of economic uncertainty has never been higher than it is right now, dating back to 2019.
Stocks, hit hard by economically vulnerable corporations, joined longer-lasting market declines that have plagued oil, copper, and bond rates for over a month.
This comes as a result of almost two years of aggressive Federal Reserve policy tightening.
When you include the latest economic data and earnings reports, the situation only worsens.
Perhaps investors are now starting to pay attention to the recession risk after pressing the snooze button several times.
Bond investors, who have long been considered the "smart money" due to their tendency to predict economic changes, have priced in quicker interest-rate cuts.
The result was a two-year Treasury rate that has yet to be seen since 2022.
Two key proxies for global growth also suffered heavy losses, sending a warning signal from the commodities complex about the future of the investment and consumption cycles.
Copper declined for thirteen of the past sixteen weeks, while oil lost all of its 2024 gains.
Although the markets have taken various paths in 2024, last week's action does have a clear predecessor: early August when bond rates and stocks fell in a volatility storm and stopped just as fast as they started due to early signs of a sluggish labour market.
The current upheaval mirrors the same set of worries that prompted the initial selloff: the possibility that the economy is coming to a standstill too rapidly for the Fed to intervene without immediate policy correction.
Many analysts believe speculative assets, such as cryptocurrency, benefit from easing monetary policy.
Elsewhere
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Perion Lim
Blockcast
A year after our previous interview with Yat Siu, Blockhead catches up with the Animoca Brands founder in Bali at Coinfest 2024 to find out how TradFi adoption is impacting blockchain gaming and the metaverse.
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Events
All Day Crypto Bash (Singapore, 17 September 2024)
Blockhead is partnering with Draper Startup House to bring you an exclusive, action-packed day at on 17 September, during Token 2049 week in Singapore.
This event, co-organized alongside Draper Nation, Hyperglade, SUN ZU Lab, Metacamp and Clubout, is an opportunity to connect, learn, and chill with the best in the blockchain, crypto, and web3 community!
Apart from panel discussions, fireside chats and workshops, there'll be food, drinks, and lots of time for networking. Bring a change of clothes if you're keen on participating in the ice baths and other wellness activities!
The event will run from 9 am to 8 pm on Tuesday, 17 September. Find a rundown of activities and registration details here.
Daemon Day (Singapore, 17 September 2024)
Join Blockdaemon on 17th September 2024 at Pan Pacific, Singapore for a day of groundbreaking discussions and networking opportunities with key players in the space. Event partners include AWS and Zodia Custody, while the event supporters include Liquid Collective, M2, MU Digital, Titanium Ventures, and Xangle.
For more info, click here.
Token2049 (Singapore, 18-19 September 2024)
Don't miss out on early bird ticket prices, until July 31! Use Blockhead's exclusive discount code BLOCKHEAD10 for a further 10% off.
All That Matters (Singapore, 16-18 September 2024)
The 19th All That Matters is the gateway to the APAC Music, Sports, Gaming, Marketing, Web3, Arts and Entertainment industries.
Conference by day and live music festival by night, ATM is Asia’s premiere ‘Business 2 Business 2 Fan’ event experience bringing together world class speakers with more than 2,000 senior executives.
Get your tickets now with Blockhead's 15% off code: ATM24BLOCKHEAD15
GeckoCon (Bangkok, 11 November 2024)
GeckoCon returns, and this year we're diving into the revolutionary world of Web3 Gaming! Discover how the fusion of blockchain and traditional gaming is creating a whole new entertainment layer.Don't miss out—visit CoinGecko now to secure your spot in our first ever Hybrid Conference set to take place in Bangkok, Thailand. Or from the comforts of your home!
Get your tickets now with Blockhead's 40% code: BHGC24
[Limited to 30 redemptions, expires 12 September 2024]
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