The stock market crash and the crypto market crash are related. More than simply a bad day for investors, this is part of a larger pattern that has been plaguing the markets for years now, and it is not getting any better.
Stock market benchmark indices BSE Sensex and Nifty 50 have witnessed drastic falls in the past few weeks, leading to loss of investors’ wealth worth over 20 lakh crore in few sessions.
Let’s find out the reasons behind this!
Table of Contents
#1. Rising Cases of Omicron
The rising cases of Omicron coupled with lockdowns and restrictions worried investors across the globe and created a panic in the Indian stock market as well.
#2. Geopolitical Tension
Geopolitical tension has also contributed to the panic selloff in the global markets.
Rising fears around Russia invading Ukraine have created a tension in the stock market and this move, if it happens will largely affect the stock markets around the globe.
#3. Indian Equities
Indian equities have been affected by the rally in crude oil prices globally.
What’s worse is the fact that if Russia invades Ukraine, the energy sector across the globe will experience the shock.
#4. Increasing Inflation
The ever increasing inflation, especially during the pandemic has been creating problems for the Central Banks.
Likewise, it has affected the investors’ sentiment and is the driver behind their worries & actions.
#5. Major Cryptocurrencies Dropped
The three biggest cryptocurrencies by market cap, Bitcoin, Ethereum and Binance have dropped between 20-30% in value since the start of 2022.
While the crypto regulation is one reason behind it, crypto market’s correlation with the stock market might also be responsible for the same.
#6. The biggest reason
US’ Central Bank The Federal Reserve indicated towards having multiple interest rate hikes this year.
This basically signs towards the end of an era of easy & excess liquidity & this is what has been majorly affecting global markets and may continue doing so in near future.