Global stock markets have collapsed, and gold has risen safely! Can Bitcoin usher in a new round of rise?

This holiday has become less calm due to the sudden collapse of the European and American stock markets. There is no sign of the global stock market crash, which makes people not a little prepared, and the level of tragic is beyond the surprise of many people.

The US stock market Dow Jones index plunged 1200 points in three days, and the Nasdaq index and the S&P 500 index also fell sharply. As the boss of the world's financial center, the US stock market has such a big adjustment, naturally let the global stock market fall into a "panic."

In the European stock market, the three major stock indexes fell sharply last night, the German stock market fell about 3%, the UK stock market fell more than 3.2%, and the French stock market fell more than 3%, both hitting a new low in a month. The impact of the Asia-Pacific stock market fell sharply yesterday. The Japanese stock market fell more than 2%, the Korean stock market also fell nearly 2%, and the Australian stock market also fell sharply.

The spot gold price as a safe-haven investment ushered in a rise, once a strong rise of 25 US dollars, and the exploration touched the important threshold of 1,500 US dollars. A lot of money has entered the gold market from the stock market, thus changing the sluggishness of gold for many days.

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Bitcoin has not been affected by the stock market. It has been oscillating around 8,000 dollars in the past two days, and has come out of a slight decline.

What is the cause of the overall decline in global stock markets? Under the stimulus of the economic downturn, will Bitcoin still go out of a new round of rising prices?

"Black Swan" incident concentrated

In the past few days, the global economy has been shrouded in the shadow of recession. The major economic indicators in Europe and the United States are unsatisfactory, the trade war between Europe and the United States will be rekindled, the political instability in the United States, and the hard-seated Brexit in the UK all indicate that the overall downward trend of the global economy is an indisputable fact.

First, the economic data has reached a new low

ADP employment data, known as “small non-agricultural”, is not performing well. According to data released on October 2, the US private sector employment in ADP increased by 135,000 in September, lower than the expected 140,000, the slowest growth rate since June. In addition, the August data was also significantly revised down from 195,000 to 157,000. From January to September 2019, the average monthly employment increased by 145,000, which was 32% lower than the average of 214,000 in the same period of last year. This means that the pressure on the US labor market has increased and the signal of the slowdown has become more apparent.

Some analysts said that this small non-farm payroll report provides further evidence of a slowdown in employment growth, and it is expected that the current good performance in the US consumer sector may not last long. As the economy deteriorates, the Fed may adopt an “insurance” rate cut in December to curb the slowdown in economic growth.

The subsequent release of the ISM US manufacturing index also fell to its lowest point in more than a decade. ISM manufacturing data also indicates weak US manufacturing activity. According to data released on October 1, the ISM manufacturing index fell to 47.8 in September, lower than the expected 50.2, the lowest since June 2009, and the second consecutive month of readings below 50. Any reading of the ISM index below the line of glory indicates a contraction in the economy.

ISM said that manufacturers' feedback has already shown “business confidence continues to decline” and stressed that “global trade remains the most important issue.”

According to ISM data, the new export order index is only 41%, the lowest level since March 2009, indicating that there is no small problem in US exports.

The prospects for US manufacturing are not optimistic, and companies are expected to stay at one of the best levels since 2012.

These two figures directly led to the US stock market plummeting. The VIX panic index, which measures the implied volatility of the S&P 500 options, rose 10.51% to 20.51, a new high in January.

The European economy is also showing signs of a recession. The German economic institutions have lowered their German GDP growth forecast from 0.8% to 0.5% in 2019. The 2020 German GDP growth rate is expected to be lowered from 1.8% to 1.1%. Germany's 2021 annual GDP growth rate is estimated at 1.4%. Data released on October 1st showed that the final value of the manufacturing PMI for the Eurozone in September was 45.7, higher than the expected value of 45.6, but still the lowest level since October 2012.

In response, German Finance Minister Olaf Scholz said that as Europe's largest economy, Germany will be able to cope with the economic crisis, adding that if the crisis occurs again, he expects that the recession will not be like 2008/2009 global finance. The crisis is as bad.

The days in the United States and Europe are not good, and trade disputes are getting worse. According to the latest news, the United States will begin to impose new tariffs on Europe on October 18.

Second, the European and American trade wars are reviving

Earlier, the WTO granted the Trump administration the right to impose a $7.5 billion tariff on European goods. A senior official at the US Trade Representative Office said that after the World Trade Organization wins, the United States will impose tariffs on EU goods. The US Trade Representative Office announced on Wednesday the list of products it plans to target, exacerbating the Trump administration's struggle for global trade.

This will inevitably lead to a new round of retaliation. The EU has already said to the United States that the EU will definitely counter this and is ready to retaliate.

Now the friction between the United States and Europe has intensified, Trump will not give in, Europe's Merkel, Mark Long will not give in, so the market is particularly worried about the friction between Europe and the United States, thus triggering the market A bigger panic, so many funds have been withdrawn from the financial market.

In fact, due to fears of a slowdown in the economy, the major US stock indexes have already fallen before the news of the expansion of trade conflicts. Investors have been worried that continued trade wars will drag down global economic growth and may drag the US into recession.

Third, the US political situation is facing a change

When the housing leaks coincided with the night rain and the economic data was not optimistic, the US political scene became unstable.

A US-U.S. presidential "call door" incident continues to stir up US politics. According to CCTV reports, the impeachment investigation of the president by the US House of Representatives continued to advance. Trump believes that the investigation is not a related impeachment, but a "coup" aimed at "blocking" his various policies, including supporting privately owned guns and building a "wall" at the US-Mexico border.

Some investors said that if Trump stepped down, the US stock market might have a rebound similar to that of Clinton. But the main worry in the market is that impeachment will undermine trade negotiations. Previously, Trump once said that if he stepped down, the Wall Street stock market would collapse.

In addition, the competition for the Democratic Party’s 2020 general election candidates has become increasingly fierce. According to the latest survey, Elizabeth Warren has more than half of the support for opinion polls, twice as much as its main competitor, Biden.

Hong Wei, managing director of Bank of Communications International and head of the research department, pointed out that Warren's populist thinking is even more extreme. Her policy agenda includes tax increase for the rich; and the splitting of large American companies such as Amazon, Google and Facebook; Assign employee representatives to the management to participate in management decisions, especially to change the distribution of labor compensation. And this series of questions is the life gate of Wall Street.

Once Warren is elected, it may be a disaster for Wall Street.

Fourth, the British hard Brexit

The British government officially submitted a new "Brexit" program to the EU on the 2nd. British Prime Minister Johnson said in a closing speech at the Conservative Party’s annual meeting that the new plan was a constructive and reasonable proposal that represented a compromise in the UK. If the EU does not accept this option, the UK will have no agreement to "Brexit" on October 31.

The European Commission subsequently issued a statement saying that the European Commission President Juncker Juncker welcomed Johnson’s determination to promote negotiations and advance the agreement. He believed that the new plan provided by the British side has made positive progress in some aspects, but there are still problems. Further consultation is needed. In addition, the EU still has doubts about customs regulations in the new program.

The statement stressed that the European and British sides must reach a legal solution to achieve all the objectives of the "backup arrangement", and hope to achieve the British agreement to "Brexit."

Analysts pointed out that although the British side believes that concessions have been made, from the EU's position, the two sides still clearly have problems that need to be resolved through consultation. It is difficult to determine whether the EU can accept the program, and it is not known whether the program can be supported by the majority of the members of the British Parliament. Moreover, even if the EU accepts the new plan, the two sides will start negotiations on a new "Brexit" agreement, and it will be extremely difficult to achieve the UK's agreement to "Broke" before the end of October.

Can Bitcoin rise again?

Due to the upswing in the US economic report overnight, the market was worried about the economic recession. As the risk aversion heats up, the spot gold in the Asian market maintained its upward trend and is now reported at around $1,509 per ounce.

Some analysts believe that due to the weakening of the US dollar index, spot gold pulled up short-term in the Asian market on Friday, hitting the $1510/oz mark earlier, but may now encounter resistance at around $1,520/oz.

The bitcoin, which is also favored by people, is flat, and there has been a slight decline. Did Bitcoin languish after the last big fall? Can Bitcoin still go out of a decent upswing? These are all issues that investors are more concerned about.

Some insiders joked that the main investors of Bitcoin are in China, and now the Chinese are taking a long vacation. Maybe it doesn't matter.

Return to the true biography. Historically, gold has been the best safe-haven species in the economic crisis, but gold is difficult to verify, difficult to keep, difficult to segment, and unable to move quickly.

In fact, since the birth of Bitcoin, it has been used to compare with gold for many times. From the perspective of commodity characteristics, Bitcoin is closely related to gold. Bitcoin's design draws heavily on the characteristics of the reprinted gold from the stationmaster's house. Both are an effective anti-inflation tool due to limited stocks and no influence from the central bank.

Bitcoin differs from gold in that the authenticity of a bitcoin balance can be quickly confirmed by blockchain technology, but it can never be tampered with, and anyone can safely keep it, regardless of the amount.

And it can't be confiscated. Even if global central banks invent their own digital currency, the government can't stop the circulation and trading of bitcoin, which means that bitcoin has permanent international liquidity. It has no national border restrictions and is settled within hours, which makes the issue of capital outflows irrelevant and open to everyone.

The high volatility of Bitcoin also raises questions about its role as an effective safe-haven asset. In fact, the price fluctuation of Bitcoin is actually a process of price discovery, and this stage must be experienced for all early-risk assets, and it is also healthy. With more and more scenarios in the application area, more and more participants in the market, the volatility of bitcoin prices will gradually decrease.

Industry insiders pointed out that Bitcoin is not a stable safe-haven asset for the time being, but it can be used as a hedging tool to buy Bitcoin while doing Bitcoin dollar contract hedging in Bitcoin futures trading, which can successfully hedge the possibility of domestic currency depreciation. .

In the opinion of economist Raoul Pal, as the US and other countries try to push the interest rate to boost economic growth, investors are increasingly flocking to gold, cash, government bonds and bitcoin as a means of hedging risk. In a tweet, the former Goldman Sachs executive revealed why the world is rapidly approaching a currency crisis. Pal also believes that Bitcoin will thrive in the upcoming currency massacre.

In other words, in the future, Bitcoin will replace gold with a high probability, becoming the mainstay of the economic crisis and becoming the best safe-haven asset. Especially in the context of the global economic downturn, Bitcoin's hedging function will be further highlighted.

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Source: Chain Internal Reference

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