Trump Sent Stocks, Bitcoin & Gold Tumbling Before Backtracking; Fed Chairman Makes a Strong Call for More Fiscal Support

Jerome Powell says the US economy is facing “tragic” risks if “too little” support is provided as the risks of even overdoing are “smaller.”

US President Donald Trump sent stocks tumbling on Tuesday after he announced his administration would abandon talks with congressional Democrats over at least $1.6 trillion additional coronavirus relief funds.

“I am rejecting their request, and looking to the future of our Country. I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business,” said Trump in a tweet late Tuesday.

All three benchmark indexes took a drop of about 1.8%, with a sell-off in some of the biggest technology companies.

Bitcoin also moved down in tandem, recording nearly 2% losses. Currently, BTC/USD is trading around $10,600, in red, managing $1.27 billion in ‘real’ trading volume.

Gold has been no different; it actually crashed the hardest at 2.5% and today is behaving exactly like BTC.

Bigger Picture: Consolidation

In 2020, bitcoin has strengthened its correlation with the stock market, but on the “super long-term charts,” BTC has always been somewhat related. But it is to be expected to act like a high-risk asset, “especially reacting loosely to the addition or removal of stimulus from central banks,” wrote analyst Mati Greenspan.

“As we see increased participation from institutional traders, this relationship is becoming ever more apparent,” he said.

However, for stocks or bitcoin, the bigger picture is that markets are still in consolidation, with price ranges narrowing and volatility rising.

So, of course, Trump changed his tune, and hours after his first tweet said Congress should quickly extend $25 billion in new payroll assistance to US passenger airlines that have furloughed thousands of workers.

“Trump backtracking partially, turning market around. Those funds currently sit in the treasury so guessing this very small fiscal stimulus should be easier to pass,” said trader and economist Alex Kruger.

Congress is not expected to return to a session for more than 10 days, which is just two weeks before the US presidential elections. Lawmakers may even make a new attempt to pass a standalone measure for this, which enjoys strong support in both the House and Senate.

Keep that Free Money Coming

Interestingly, amidst this, Federal Reserve Chairman Jerome Powell warned of potentially tragic economic consequences if additional support to households and businesses aren’t provided.

“The expansion is still far from complete,” said Powell during a virtual conference of private-sector economists Tuesday adding, the risks of policy intervention are “still asymmetric.”

That's why I own #Bitcoin
Source: @TylerWinklevoss

If the support is too little, it will lead to a weak recovery that would harm the economy’s productive capacity. At the same time, on the other side, the risks of over-doing are “smaller,” “even if policy actions ultimately prove to be greater than needed,” said Powell.

With many expected to undergo extended periods of unemployment, Powell calls for further support in his strongest remarks to date on the subject.

“The recovery will be stronger and move faster if monetary policy and fiscal policy continue to work side by side to provide support to the economy until it is clearly out of the woods,” he added.

Bitcoin (BTC) Live Price

1 BTC/USD =12,912.5291 change ~ -1.62

Coin Market Cap

239.2 Billion

24 Hour Volume

30.2 Billion

24 Hour Change

-1.62

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AnTy
AnTy
AnTy has been involved in the crypto space full-time for over two years now. Before her blockchain beginnings, she worked with the NGO, Doctor Without Borders as a fundraiser and since then exploring, reading, and creating for different industry segments.

[Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

[Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer

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