On Wednesday, US 2-year bond yields and 10-year bond yields were upside down, triggering market concerns about the US recession. US stocks opened lower, and the cryptocurrency market continued its downward trend yesterday.
According to CCN, the 10-year US Treasury yield on Wednesday morning was 1.623%, lower than the 1.534% 2-year bond yield. This upside down situation occurred last time on the eve of the subprime mortgage crisis, and then the US entered a period of economic recession. Although according to past experience, the economic recession will not occur immediately after the indicator has been reversed, it indicates that investors in the market are worried about the international situation and economic growth prospects.
Sung Won Sohn, an economist at Loyola Marymount University, said the indicator predicts an extremely accurate economic trend. In the nine economic recessions that occurred after the Second World War, its success predicted seven times, with a precision of nearly 78%.
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Affected by this, all major Wall Street indices fell sharply at the opening, completely reversing from the recovery brought about by the easing of Sino-US trade war yesterday. The Dow Jones Industrial Average plunged 400 points at the opening and the S&P 500 index fell 51.87 points. The Nasdaq index fell 160.82 points.
Data from Credit Suisse show that, on average, the recession tends to occur 22 months after the US bond yields reversed. The stock market will tend to climb in the following year, but this is not a sign of the economic recession, which indicates that the central bank's easing policy is too little and too late.
Marc Ostwald, global strategist at ADM Investment Services in London, said in an interview with Bloomberg: "The bond market indicates that the central bank has fallen behind, which is a sign of pessimism and negative for the global economy."
Unlike before, the cryptocurrency market has also been affected by this news. The highest-value cryptocurrency bitcoin continued to fluctuate after falling below the $11,000 mark yesterday. Both long and short sides continued to go down after fierce competition around $10,500, and once approached the psychological support of $10,000. From the overall market environment, the signal of the easing of the Sino-US trade war yesterday brought downward pressure on Bitcoin, but the turmoil around the world, especially Hong Kong, is still creating demand for Bitcoin as a safe-haven asset.
Nicholas Colas, co-founder of market research firm DataTrek Research, said in an interview with CNBC that Bitcoin is becoming an indicator of the degree of geopolitical turmoil. It believes that the price of Bitcoin can be used to observe the recent developments in tensions in Hong Kong.
According to QKL123 market, as of 08:10 today, the current price of Bitcoin is 10195.03 US dollars (RMB 72031.35 yuan), a 24-hour drop of 6.45%.