Market Recap: Bitcoin, Ether Drop as US Deploys Troops to Eastern Europe
Bitcoin dropped as much as 5% while ether dropped as much as 5.7% on the day
- Crypto markets dropped today on news that the US would be deploying troops to Eastern Europe
- The Eurozone’s annual rate of inflation rose to 5.1% in January, causing more uncertainty on the overall strength of the economy
US troops deployed to Eastern Europe
President Biden has approved the deployment of around 3,000 American troops to Eastern Europe in an attempt to protect NATO allies in the event of further Russian aggression. Markets dropped steeply on the news, with bitcoin dropping as much as 5% and ether dropping as much as 5.7% on the day.
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Traditional markets reacted harshly to the news as well, with the S&P 500 dropping as much as 0.50% early in trading hours, only to climb back half a percent in the positive by the end of the day. The Nasdaq followed a similar trend by dropping by about 0.4% and climbing up 0.8% later.
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Inflation around the world seems to be skyrocketing as figures come in for late 2021. Recent year-over-year inflation figures in the US show CPI (consumer price index) and PCE (personal consumption expenditure price index) rose to 7.1% and 5.8%, respectively.
The Eurozone's inflation numbers are showing a similar pattern, with consumer prices rising to 5.1% in January, a new record. The trend is likely the result of loosened monetary policy and increased economic stimulus in an attempt to fight the economic downturn caused by the Covid-19 pandemic.
While bitcoin has been heralded as a hedge against inflation and has performed well in the inflationary period that has followed the pandemic, it's unclear how more intense inflation will affect the economy. If prices of goods and services continue to climb at a rate higher than the increase in wages, fewer people will be able to afford to invest after paying for necessities.
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Meta (FB) is scheduled to release its earnings report today. The company has pushed further into the crypto industry over the last year, starting with its rebranding from Facebook to Meta and its commitment to the metaverse. The company fell by over 20% in after-market trading leading up to its earnings call.
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While there has been positive news as of late, like India and Russia's decision not to ban cryptocurrency and loads of companies jumping onto the crypto and metaverse train, a heavy uncertainty still hangs over the markets. Many investors seem to be waiting on the Fed's next policy change to combat inflation.
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