The stock and crypto markets are going down today, erasing billions of dollars in value, and continuing a trend that has been going on since last week.
Stock and Crypto Markets Have Crashed
Bitcoin pulled back below $90,000 and was trading at $88,900 at press time. Similarly, Ethereum price dived below the key support level at $3,000, while the market capitalization of all coins dropped by nearly 4% in the last 24 hours to $3 trillion.
The stock market also dived, with the Dow Jones, S&P 500, and Nasdaq 100 indices falling by over 1%. Global indices like the Nikkei 225 and the Hang Seng have also retreated sharply.
These assets are tumbling because of the ongoing geopolitical risks after Donald Trump warned that he would implement tariffs for goods from key trading partners like Denmark, France, and the United Kingdom. He made this threat because of his ongoing pursuit of Greenland, a semi-autonomous island he wants the US to buy from Greenland.
READ MORE: Pi Network Price Forms Bullish Patterns After Hitting All-Time Low
A trade war between the United States and key Nato allies would have major consequences over time. On the positive side, the Supreme Court is considering the legality of Trump’s tariffs, and a ruling against him would remove the leverage that he has been using.
A major risk is that European countries may start selling their American bond and stock market assets as the risks continue.
Odds of Bank of Japan Interest Rate Hikes
The stock and the crypto markets are also crashing because of the ongoing developments in Japan, the fourth-biggest economy in the world. The country’s currency and bond market have fallen sharply this week, raising concerns that the Bank of Japan will deliver more hikes this year.
Citigroup analysts believe that the bank will deliver three hikes this year, bringing the benchmark rate to 150 basis points. Other analysts also expect the bank to hike interest rates as the Federal Reserve slashes rates.
Odds of these hikes rose after Prime Minister Sanae Takaichi called for a snap election and promised to cut taxes and boost stimulus, moves that will widen the budget deficit.
All these factors have led to a sense of fear among investors, with the Crypto Fear and Greed Index falling to 32 and the one tracked by CNN Money falling to 48. As a result, American investors have continued to sell their ETF holdings in the past few days, leading to more selling pressure among these assets.
READ MORE: Ethereum Price Prediction as Staking Ratio Surges and ETH Supply Dips
