The US Federal Reserve’s large-scale stimulus efforts prompted major indices to rally. But as the markets closed for the weekend, Bitcoin’s price faltered.
This week, unprecedented levels of economic stimulus stabilized major US indices, putting an end to weeks of freefall caused by the coronavirus pandemic. All the major US equity indices were up by around 9% to 12% this week—on Tuesday, the Dow Jones had its best day since 1938.
Bitcoin had its least volatile week since its price cut in half on March 13. Since Tuesday, Bitcoin has consistently hovered around the $6,500 mark, according to data from metrics site CoinMarketCap. It’s the same for other major coins—Ethereum stuck closely to the $130 mark this week.
But Bitcoin’s stability gave way as soon as the stock market closed down for the weekend. Overnight, its price has dropped from a high of $6,689 to lows of $6,135—its lowest price since Monday morning. Other top coins also erased most of the week’s gains overnight.
Bitcoin’s collapse in price could be the aftershock to the stock market’s poor performance on Friday. The Dow dropped almost 24% on Friday; a difficult end to a strong week—it ended the week up 12.8% compared to the previous week.
European markets also performed well this week following local measures to counteract the economic impact of the virus. Key European indices this week rebounded between five and eight percent, reported investment management firm T. Rowe Price.
Japanese stock markets rose significantly this week. The Nikkei 225 Stock Average rose by 17.1%. Chinese indices saw an uptick midweek, but plateaued by the end of the week. By Friday, the Shanghai Composite was up 4.2%, while the CSI 300 index gained 5.2%.
Room to breathe
But while the US economy could be in a recession, according to Fed Chairman Jerome Powell, the White House has managed to halt its complete collapse—at least for now.
A stimulus package, approved by the Senate in a unanimous vote on Wednesday and signed by President Donald Trump on Friday, provided confidence to the market. The package addressed concerns about the spread of the coronavirus pandemic, which New York governor Andrew Cuomo said is spreading in New York faster than “a bullet train.”
With the global uncertainty caused by the coronavirus pandemic and the US unemployment seeing new records, it’s hard to say what the next week may hold in store.