Major stock indexes have fallen today as the market appears to be a bit unhappy about Jerome Powell refusing to pressure banks to pass on low interest rates.
In a press conference on Wednesday asked about banks lending just $1.4 billion to small and medium sized businesses out of a $600 billion exceptional fund, Powell said banks have to lend to solvent businesses.
Had it not been for this debacle, you’d think the markets would have somewhat liked the policy of endless money printing, but if that money doesn’t find its way to mum and dad, then the economy might not quite recover as much as it could.
It may also be simply that stocks have risen in the past few days, and Dow is not far off from all time high, so a little dip is maybe what you’d expect.
Or, as some are speculating, maybe some are taking profits from stocks and putting them into cryptos.
Bitcoin and eth are kind of hot again, especially defi which is turning heads right now. So the risk and reward calculation may well have changed for some stock investors.
Eth is kind of leading again, although there’s a bit of ping pong with bitcoin, but there’s now a new defi relationship we’ve been trying to figure out.
Arguably there isn’t enough data, at least from just observation, but in the medium term, defi bullishness or lack of it clearly feeds into eth because you need eth to participate in defi for the network fees.
Therefore defi is most likely bringing in new money into eth directly, but in the short term, and we’re talking about hours, there isn’t an obvious relationship with Uniswap for example rising considerably while eth hasn’t risen that much.
This may be because Uniswap has the show right now and therefore either new fiat or crypto ‘fiat’ is clearly going to that primarily, with eth more an observer maybe.
You’d think then the new Uniswap value would find its way to eth, at least partially, with generally there appearing to be a complementary relationship.
These internal crypto factors make any correlation or lack of it with stocks a complicated analysis because until now they were seen to be moving together.
That may be changing to some extent and at least temporarily because very new things are happening in this space, and therefore this space may well be a bit more bullish than stocks.
Cryptos however in some way feed into stocks as well because they are more and more an entry point for cool and smart people who want to invest or trade, with cryptos giving a crash course to many on finance and investment and assets, eventually then leading to a better understanding of stocks, bonds, and the rest, and thus a kid becomes a financier.
Obviously we wouldn’t expect grandpas to appreciate this new value creation and how it benefits the economy considerably, so they’re focused exclusively on propping up stocks, but cryptos arguably have more power to change the general atmosphere towards optimism because they are more owned by ordinary people.