Markets and cryptocurrency on a rollercoaster in light of recent events

Published: Jan. 11, 2021 at 2:46 PM CST
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BISMARCK, N.D. (KFYR) - Eleven days in, and this year has already taken investors on a wild ride. Financial experts say this is precisely what’s creating volatility in a variety of markets.

Protests at the Capitol, talks of impeachment, the possibility of future inflation and the lingering pandemic are creating lots of market uncertainty.

Longtime investor Darrell Williams says these events impact his mood.

“This last year has been horrific. I think it’s turned the world upside down. I think it’s made life extremely stressful and unpredictable,” Williams said.

While Williams has held steady in his investments, Financial Advisor David Wald says emotion can and has pushed many to invest or pull out.

“We’re focusing right now on emotion, probably more so than economic events. And, when we see that, we see the market act kind of goofy. Where, days you think that the market should be up because we’ve got good economics, the markets actually negative because political events. And vise versa,” Wald said.

The day of the Capitol protests, the S&P500 finished in the positive. Wald speculates this was likely due to the hope COVID-19 vaccines have brought with them. Five days later, more volatility hit as the market opened the second trading week of the new year with a sharp drop from Friday’s record high closes.

Wald says uncertainty with the future presidential administration likely plays a part.

The Biden administration has pledged to push another stimulus package through Congress, which could impact the value of the U.S. dollar.

“If you have stimulus spending, what’s that’s going to is increase obviously our deficit. And, that’s where things get a bit dicey,” Wald said.

This could be what’s causing many to invest in Bitcoin as a hedge against inflation, according to CNBC. The cryptocurrency is up over 300% in the last 12 months.

“If you took a dollar, and you put 99 cents of it in cash and one penny in Bitcoin over the last 10 years, that asset allocation strategy outperformed the S&P500,” said Wall Street Financier Anthony Scaramucci.

However Scaramucci says, just as with the stock market, Bitcoin and other cryptocurrency will likely have a volatile road ahead in 2021.

The volatility is evident in the cryptocurrency sell-off Monday morning, resulting in a $200 billion loss.

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