This week is not starting well for investors in cryptocurrencies and tech stocks. A lot of those are drastically losing value and meaning. But the reasons for this big sell-off in the public market are circumstantial.
Everything loses value: Image: BBC
Bitcoin, Cardano, Apple, Microsoft. All of them have lost at least 3% of their value in the last 24 hours. Cardano even 11%. But not only today, but also last week it was a bad time on the market.
Reasons
Last week, the FED (Federal Reserve) raised interest rates by 50 basis points (0.5%). This with the justification that inflation has risen sharply in recent months and years. Currently, the rate is 8.5%.
However, inflation is not coming out of nowhere. The war in Ukraine has put a lot of pressure on the markets, as many companies are not able to maintain their profit margins as they did before the war.
Likewise, oil and food prices are rising, causing investors to fear inflation and triggering an escape from risk assets - such as cryptocurrencies and equities.
A smaller reason for market anxiety is that China's economy is in lockdown. Since the start of the Covid 19 pandemic, China has never recorded as many Corona cases as it has today. In April this year, China has recorded an export growth of 3.9%, which is far less than 14.7% in March this year.
