Tuesday’s European session, the panic index VIX once rose 10.5% to 25.92, a new 3-week high. On the U.S. stock market, the Nasdaq futures expanded to 2%, the S&P 500 futures fell 0.8%; European stocks opened slightly up after turning down, the plate of Chinese stocks fell to expand, the German DAX index fell 1.7%, Italy’s FTSE MIB index fell 1.2%, the Euro Stoxx 600 index fell 1.4%.
Bitcoin is also plunging, falling more than 10% during the day.
After investing $1.5 billion in bitcoin, tesla‘s stock price is now directly linked to the price of bitcoin, said Daniel Ives, an analyst at investment bank Wedbush. In the eyes of Wall Street, Tesla is now closely tied to bitcoin. While it booked a $1 billion profit in its first month of investing in bitcoin, it comes with additional risks, as seen this week (falling stock prices and bitcoin prices). Despite some concerns, Ives believes that bitcoin is a “smart move at the right Time” for Tesla.
Another risky asset, Crude Oil, was not spared either. U.S. and Brewer oil fell more than 1%.
The 10-year U.S. bond yield spike momentum to converge, the European session fell back below 1.36% after a slight recovery, but after the U.S. opening began to slide again. Spot Gold and silver did not turn up as a result. Spot gold once lost $1,800/oz and set a new daily low; spot silver once fell 3%. Only the U.S. dollar index is rising among all species, and the U.S. index has climbed from a daily low of 89.9 to above 90.2 at the beginning of the U.S. session.
Institutional analysis suggests that bitcoin’s decline may signal a pause in bond selling. Bitcoin is on the verge of its biggest two-day drop in a month, which could be a harbinger of a pause in the bond sell-off that has the market panicked. Cryptocurrencies and bond yields are spiking for the same reason, namely expectations of massive stimulus measures. According to market values, bitcoin yields are sharply in sync with 10-year Treasury yields in the U.K., Canada, Germany and the U.S., among other countries. The bond sell-off in Asia is even showing signs of easing. This may be one reason why U.S. bond yields have slipped.
In addition, another reason for the general decline in risk, safe-haven asset prices and U.S. bond yields is that tonight Federal Reserve Chairman Jerome Powell will attend a congressional hearing, investors are particularly concerned about Powell’s reaction to the recent sharp rise in U.S. bond yields and the sharp market volatility, as well as the possible release of subsequent monetary policy signals, so risk aversion heated up and the panic index rose.
Despite the brief drop in U.S. bond yields, growing bets that the U.S. economy will take off later this year have led to the longest sustained downturn in four months for the Nasdaq 100 – the stock index that earns the highest-rising stocks in the stock market.
The tech-dominated Nasdaq 100 fell 2.6 percent Monday, dragged down by a plunge in a number of geeky concept stocks that has seen the index fall for five straight days.
U.S. stocks opened lower on Tuesday, with the S&P 500 extending its losses to 1 percent. Multiple stocks in the blockchain sector fell hard, with Kanan Technology down 18 percent, Xunlei down 16 percent, Riot Blockchain down 18 percent, Ninth City down 20 percent and Bit Digital down 16.3 percent.
New energy vehicles in general fell, Tesla fell nearly 13%, market value fell below $600 billion; Maverick Electric fell 9.6%, Azera and Ideal Cars fell 8.6%, Tesla fell 5.8%, Baidu fell 5.5%, Xiaopeng car fell 5.4%. Heavyweight technology stocks all sank, with Paypal down 6.4%, Nvidia down 5.4%, TSMC and Alibaba down more than 5%, and Apple down 3.4%. This dragged the Nasdaq down to 3% at the beginning of the session.
As initial signs of Inflation and soaring U.S. Treasury yields emerge, investors are increasingly concerned that the sky-high valuations of some technology companies may be difficult to justify, and that the relative attractiveness of the stock market is eroding for high-growth companies that rely on easy borrowing may also suffer as a result. In addition, these technology stocks also rose during the Epidemic, so some investors may be closing out their profits and moving into stocks that have done well in the recovery.
Wells Fargo believes that the dollar could continue to strengthen if rising U.S. Treasury yields weigh on stocks. Strategists Erik Nelson, Mike Schumacher and Zachary Griffiths wrote in a Tuesday note that absolute changes in U.S. real and nominal yields are “critical” to the direction of the dollar, while risk sentiment is “a key volatility factor.
If stocks “stand firm in the face of higher yields,” the dollar index could rise 1-2%, back to the February highs. However, if higher U.S./developed market real and nominal yields overwhelm equities, the dollar could see even greater gains in the coming weeks, with the dollar index potentially climbing 3-5%.
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