• The European Central Bank (ECB) surprised markets last Thursday by raising their interest rate by 0.50%.
• As a result, both the stock market and cryptocurrency market saw a dip before recovering slightly as reports emerged that JPMorgan and Morgan Stanley were looking to help First Republic Bank.
• Bitcoin retested the $25,000 area while the S&P 500 had gained about 1% after initially plunging on ECB news.
ECB Raises Interest Rates
The European Central Bank (ECB) on Thursday surprised markets with a 50 basis point rate hike, resulting in a plunge in both stocks and cryptocurrencies.
Reactions to ECB Rate Hike
Stocks reacted lower following the news, while crypto analyst Michael van de Poppe suggested that the US Federal Reserve could follow suit at its meeting next week. Despite trading down 0.7% at one point, the benchmark S&P 500 index had recovered to post 1% gains by 12:20 pm ET, while Dow Jones Industrial Average had reversed its losses of over 300 points and was up 0.3%. Additionally, the Nasdaq Composite was up 1.5%.
JPMorgan and Morgan Stanley Aid First Republic Bank
Investors remain cautious but stocks have seen some recovery thanks to reports of banking giants JPMorgan and Morgan Stanley coming to aid troubled lender First Republic Bank.
Bitcoin Retests $25K Area
The flagship cryptocurrency also saw declines in reaction to the ECB news but has since rebounded as it continues to be highly correlated with equities despite last week’s spike which had some observers suggesting decoupling for Bitcoin from other traditional assets like stocks.
Conclusion
Overall, volatility remains high as investors continue to monitor news from central banks which could further impact both cryptocurrencies and stocks alike.