- Bitcoin retested the $25,000 mark, while S&P 500 saw a 1% gain after falling on the ECB interest rate rise news.
- The ECB surprised the world on Thursday with a 50 basis-point rate hike
- According to reports Morgan Stanley and JPMorgan want First Republic Bank to buoy its stocks.
After trading lower, stocks and Bitcoin have slightly recovered. This was due to investors reacting to the most recent monetary policy news by the European Central Bank (ECB).
On Thursday, markets were digesting recent events around US banks and the possible ramifications to the Federal Reserve’s next move on its rate hikes when the ECB announced a surprise 50 basis points interest rate hike. Stocks responded less, as did the crypto markets. Crypto analyst Michael van de Poppe suggested that the Fed could do the same at its meeting next week.
ECB raises interest rate by 50bps
This signals that Powell is not planning to pivot and that he will likely continue his policy of raising 25bps/50bps the following week.
The markets are correcting.
— Michaël van de Poppe (@CryptoMichNL) March 16, 2023
S&P 500, Bitcoin recover after ECB news
Thanks to the resurgence in regional bank shares, the S&P 500 saw a slight rebound.
Despite being down 0.7% at one stage, the benchmark index was still up 1% at 12.20 ET. The Dow Jones Industrial Average, which plunged by more 300 points initially, has reversed its slide and is now gaining with just over 100 point or 0.3%. The Nasdaq Composite was also up 1.5%.
Despite the fact that US stocks are now higher following reports that JPMorgan and Morgan Stanley were helping First Republic Bank, investors remain cautious and have concerns.
Bitcoin faced resistance at $25,000 on Thursday, as cryptocurrencies continued to follow events in the stock market.
The flagship cryptocurrency, which traded lower earlier in the day amid the highlighted broader market downswing, showed it’s still highly correlated to equities despite last week’s spike that had some observers suggesting a rising decorrelation.
As CoinJournal analyst Dan Ashmore points out in our deep dive, Bitcoin could eventually separate from other risk assets. However, that’s an outlook that mostly doesn’t apply to the current trading scenario, with the two assets largely in lockstep.
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