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Digital Asset Daily: Fear turns to panic
with Mati Greenspan
If on Friday we were talking about fear, by Monday morning the markets are feeling an all out panic.
President Trump, along with Congress, did a good job of calming people down on Friday afternoon by ensuring the public that they’re ramping up production of Coronavirus test kits but progressions over the weekend have been way too much for the markets to fathom. Expect another Trump press conference in the next few hours.
As far as volatility is concerned, we’re now at levels last seen during the financial crisis 12 years ago.
Crude oil, on the other hand, has no limit down and did end up gaping down 27% after Russia refused to go along with Saudi Arabia’s production cuts. Needless to say, everything that has to do with oil and energy is crashing today.
The Dollar Frown
Out of all the outrageous market movements lately, the fall of the US Dollar is probably the most under-reported.
Usually, the USD tends to play a supportive role and acts as a sort of safe haven during times of crisis. The Dollar Smile is a theory that states that the USD should do well when the economy is good because people will want to take advantage of the opportunities and that it should do well when times are bad because people will use it as a safe haven.
However, in this time of extreme stress we’re getting a real chance to examine the strength of the world’s reserve currency. At least for the moment, it’s not the US Dollar but the Japanese Yen that is filling the safe haven role today.
Here we can see the relative movements of the Forex market today. The USD is down sharply against just about everything except the Canadian Dollar, which is no doubt suffering off the slide in crude oil.
If we zoom out though, we can see that the USDJPY has been one of the biggest movers off the recent volatility.
Back to Mirror Mode
The word ‘coronavirus’ appeared in 11% of posts on social media. But that’s to be expected I guess. What’s surprising is a word that was in that very spot not more than two weeks ago but is now not even being discussed anymore. The word ‘halving’ does not appear at all.
The word ‘fears’ is also prevalent in the above image, as is ‘drop, stocks, and outbreak’ so it’s quite clear that fear is here. And if the price action isn’t enough to signify the contracting market sentiment, we can also see that the amount of funds currently deployed in DeFi smart contracts is also dropping fast.
Hopping things turn around soon. Wishing you a safe and healthy day. Don’t forget to share this post and subscribe if you’re not already, and don’t forget to wash your hands!!
Best regards,
Mati Greenspan
Analysis, Advisory, Money Management
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