Trade War Fears
The growing threat of a new trade war is generating palpable anxiety among investors, with significant repercussions on financial markets. The Nasdaq 100, a barometer of the tech sector, is facing considerable bearish pressure, recording a decline of 3.7% today and a troubling -7.2% on a weekly basis. This negative performance places the current week among the worst since January 2022, with losses reminiscent of strong instability scenarios like the onset of the Covid-19 pandemic in February 2020.
The VIX index, which measures expected volatility and is often interpreted as an indicator of market fear, has surpassed the 40 threshold, reaching peaks around 45. These high levels signal a marked risk aversion and increasing uncertainty among traders. Selling pressure has pushed the Nasdaq 100 below 18,000 points, with an overall loss of 19.9% in the last 44 days. This dangerously brings the index close to the technical definition of a Bear Market, which would be realized with a loss of 20% or more from a recent high.
The cryptocurrency market is also feeling the effects of this climate of uncertainty. The experience of the 2022 bear market highlighted a correlation between the difficulties of the Nasdaq and the performance of Bitcoin. During that phase, the significant decline of the tech index was accompanied by an even sharper crash for the leading cryptocurrency.
Despite its evolution, the price of Bitcoin remains sensitive to the liquidity dynamics of the global financial market and investor sentiment. Although Bitcoin has not yet experienced a 50% drop from its recent peak, the strong bearish pressure on the Nasdaq and the context of growing fears about trade tensions suggest a vulnerability in the cryptocurrency market. The current situation requires cautious observation, as the intensification of global economic concerns could trigger further declines in both the stock market and the cryptocurrency market.
