Why did the US stock market and Bitcoin collapse collectively? The reason behind it is actually related to economic data, you will never guess!
Hello everyone, today we will talk about the reasons why the US stock market and Bitcoin collapsed collectively.
You may be surprised that the key behind this is actually related to economic data.
Let's take a look at the specific data. The job vacancies in the United States in November reached 8.098 million, which was expected to be 7.74 million and 7.744 million in the previous period. This data exceeded expectations and was very strong. Let's look at the US ISM non-manufacturing PMI in December. The value was 54.1, the expectation was 53.3, and the previous value was 52.1, which was also far beyond expectations and extremely strong.
You may wonder why strong economic data will lead to a market crash? In fact, the ISM service industry (non-manufacturing index) is an important data released by the US Supply Management Association. It examines the situation of non-manufacturing in production, new orders, commodity prices, inventory, employees, order delivery, new export orders and imports, and is a leading indicator of economic health. Generally speaking, any index above 50 indicates that the economy is expanding, and anything below 50 indicates that it is shrinking. Although it has a much smaller impact on GDP than the ISM manufacturing index, if the index is higher than expected, the dollar should be considered strong/bullish, while if the index is lower than expected, the dollar should be considered weak/bearish.
However, sometimes the market reaction may not be so intuitive, and strong economic data may also cause market concerns, such as rising inflationary pressures, increased expectations of Fed rate hikes, etc., which may lead to a market crash.
Behind the collapse of US stocks and Bitcoin, economic data played an important role. For investors, it is very important to stay vigilant and pay attention to changes in economic data.
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