The onset of a fresh oil price conflict between Russia and Saudi Arabia, combined with widespread coronavirus worries, caused the U.S. stock market to tumble dramatically on March 9th, triggering panic selling in the crypto markets as investors hastened to seek out more secure investments.
On Monday morning, both the S&P 500 and the Dow Jones The Dow and S&P 500 sank over 7%, prompting an early-session pause in trading at the New York Stock Exchange that lasted 15 minutes.
NYSE president Stacey Cunningham shared with CNBC, 'The trading pauses allow investors to process market events, understand the situation, and adjust their strategies accordingly.'
Though the break offered a short respite, the trading day ended with most equities, indices, and commodities still deep in the red, prompting some to speculate whether a bear market is around the corner. Monday's drop was noted as the most severe since the last global financial crisis. since 2008 Unlike stable currencies seen as 'safe haven' assets, cryptocurrencies such as Bitcoin don't perform well in pessimistic markets, instead thriving in favorable conditions.
Crypto Sell-Off Ensues
Despite this, the crypto markets weren't shielded from the massive shift away from risky assets that swept through major markets on March 9th.
Prior to the turmoil, Bitcoin had traded as high as $8,900 but subsequently plummeted past $8,000 and slid to below $7,700, briefly stabilizing at approximately $7,750. This continued the bearish trend observed during the previous weekend, where declines were already being anticipated due to oil and market forecasts.
Various cryptocurrencies faced significant losses that day, with Ethereum's ETH dropping to $195 (down 8.9%), XRP falling to $0.20 (down 4.8%), Bitcoin Cash reaching $261 (down 8.5%), Litecoin hitting $48 (down 10.4%), EOS at $2.98 (down 6.9%), BNB dropping to $16 (down 11.2%), Tezos at $2.38 (down 16%), and Chainlink settling at $3.95 (down 11.27%). bitcoin sunk The oil price war initiated by Russia and Saudi Arabia led to a steep 20% decrease in oil prices on March 9th, making it the worst trading day for the commodity since 1991.
Other top cryptocurrencies The disagreement arose following the two countries' failure to agree on oil production cuts, prompting them to flood the market with crude oil, causing prices to crash to around $31 and predictions from Goldman Sachs suggesting a possible drop to $20 per barrel.
Understanding the Fear
These upheavals in the oil sector have left investors jittery, raising concerns that extend beyond the industry and into other sectors — especially with the ongoing coronavirus pandemic which has massively reduced travel needs and consequently oil demand. The potential for a prolonged economic downturn lingers as the pandemic provokes widespread investor anxiety.
Ryan Selkis, the mind behind the cryptocurrency intelligence platform Messari, has been closely monitoring coronavirus developments over the past few weeks.
Selkis warned that the virus could potentially lead to mass fatalities and incite the next major economic downturn, as more regions face lockdowns and businesses continue to shut down.
Another Crypto Bear Market?
If such predictions play out, Selkis expects that the cryptocurrency market could undergo significant stress:
In a March 9th post titled “ RIP Moon Times 'Beyond Bitcoin and Ethereum, we're likely to witness a meltdown reminiscent of late 2018. In these unpredictable times, where portfolios might suffer declines of up to 40%, holding anything but these two mainstays feels exceedingly risky.'
It is a cautionary tale, one that's important to consider, at the very minimum.
With his expertise in Ethereum, Dai, and Bitcoin, William M. Peaster is a seasoned writer and editor. He's contributed to outlets like Blockonomi, Binance Academy, and Bitsonline, delving into smart contracts, DAOs, dApps, and the Lightning Network. You can find him sharpening his Solidity skills on Telegram via @wmpeaster.
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