Known for its extreme volatility, the digital currency ecosystem is also being weighed down the way most traditional stock market indices are.
The Omicron variant of the coronavirus has remained a major consideration in shaping the stock market outlook as investors have continued to react in different ways with the Dow Jones Industrial Average (INDEXDJX: .DJI) adding a 0.26% gain to 36,398.21. While the Dow ended in greens, the remaining indices retreated, dragged down by key sectors that were set to be heavily impacted by the Omicron-induced restrictions.
The S&P 500 (INDEXSP: .INX) dropped 0.10% to 4,786.35, the Nasdaq Composite (INDEXNASDAQ: . IXIC) shed off 89 points atop a 0.56% plunge to 15,781.72. The small-cap Russell 200 Index (INDEXRUSSELL: RUT) also felt the weight of the bearish turn and slipped 0.66% to 2,246.51.
At the moment, investors are awaiting news updates from the Omicron spread as this can significantly affect the direction of their investment.
“We’re unwinding some of that knee-jerk and initial reaction for the omicron variant,” said Victoria Fernandez, chief market strategist at Crossmark Global Investments.
The market is holding up strong as a series of clinical researches have shown the Omicron strain is not as deadly as the earlier variants. As such, the United States Centers for Disease Control and Prevention announced earlier this week that the isolation duration for those who test positive with Omicron will now be reduced to 5 days from 10 days provided they show no symptoms or complications.
Key sectors of the market have also reacted in line with the current realities in the market. American Airlines Group Inc (NASDAQ: AAL) gained 2.04% to $18.54 while the shares of Moderna Inc (NASDAQ: MRNA) slumped 2.20% to $241.44.
“If the market isn’t beaten down by this new Covid variant, I think it tells you there’s nothing stopping the market from keeping on advancing the rest of the year,” Margaret Patel, Allspring Global Investments senior portfolio manager, told CNBC’s “Squawk on the Street” on Tuesday.
Dow Jones and the Stock Market Correlation with Crypto amid Omicron Fears
Known for its extreme volatility, the digital currency ecosystem is also being weighed down the way most traditional stock market indices are. The global crypto market is worth $2.25 trillion after retreating by 2.66% in the past 24 hours.
This plunge is being led by Bitcoin (BTC) which retreated by 2.45% to $47,892.88 according to data from CoinMarketCap. Ethereum (ETH) is also down by 2.36% to $3,810.92, a position that showcases a similar bearish trend amongst the top 17 digital currencies.
It is obvious that the caution investors are extending to the stock market is having a massive rub-off on digital currencies as well. This proves the correlation is high at the moment and a rebound in the S&P 500 is likely to stir an upsurge in Bitcoin and the hoard of altcoins around today.
Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
