Whether you’ve seen it on the news or felt it in your stock portfolio, the stock market has taken some big hits all around with the Dow having fallen 725 points Monday, July 19. This was the worst day for the Dow since the drop in late October 2020 when it fell 943 points, and without a doubt, the biggest decline of the year so far.
In light of this news, Bitcoin has seen a massive selloff as the cryptocurrency dips below $30,000 for the first since June of this year.
Delta Variant Fears
The stock market drop can be attributed to many factors, but one of the chief reasons is the rise of COVID-19’s Delta variant which is the most contagious of all the other virus strains. COVID hospitalizations have been increasing throughout the United States with California, in particular, has reached 2,000 cases, the most in the state since early April.
In the response to the new cases, Democratic and Republican politicians, as well as the White House, are urging people to take the COVID-19 vaccination who haven’t already done so to stop the spread of the virus.
Uncertainty and Doubt
Investors were worried that the Delta variant would threaten economic recovery and those fears were unfortunately realized as certain industries, which were thought would benefit from reopening, are getting hit the hardest. Airline companies like Delta Airlines (NYSE: DAL) and United Airlines (NASDAQ: UAL) went down around 4% and 5% respectively, and cruise lines like Royal Caribbean (NYSE: RCL) have down 4% as well.
Cruise lines should pull out of Florida. It’s not the only state with ports on the east coast. Doesn’t even have to be forever, I bet the Republicans back down after six months.
— Lizzie Mac (@LizzieMac79) July 14, 2021
Investors continue to head for the hill as they pour money into government bonds and not stocks as they look for more stable places to put their savings in.
Dragging Bitcoin Down
Something that people may not be aware of or forget is that cryptocurrencies in general follow traditional financial markets like the stock market, so they too feel the effects of the drop. As of July 20, about $98 billion of the whole cryptocurrency market disappeared in the previous 24 hours with Bitcoin hitting $29,600 a token and Ethereum reaching $1,700.
Down they go. pic.twitter.com/xDWoQbooGg
— Bitcoin (@Bitcoin) July 20, 2021
The bad news doesn’t stop there; if more investors sell off more Bitcoin and the bulls lose their grip, the crypto asset could fall an additional 40%.
Despite the recent volatility, some industries and stocks have remained strong such as pharmaceutical companies. COVID-19 vaccine maker Moderna (NASDAQ: MRNA) and BioNTech (NASDAQ: BNTX) have roughly seen a 10% and 5% surge on July 19 respectively.
Ugh wish I bought more stocks with Moderna 😪
— Dominique Historia ✨ (@historia__xo) July 19, 2021
The S&P 500 index has surged 13% this year and is up 90% compared to the lows of March 2020 at the onset of the pandemic. Some people are taking this opportunity to “buy the dip” and with this recent downturn, there’s ample opportunity to do so.
Financial planner Philip Chao says “buying the dip, it’s been successful for a long time”. None of this has been financial advice and I recommend that you speak to a financial advisor. Some experts and professionals are remaining bullish in light of this downturn.
Personally, I think we’re going to be stuck in this stock market winter for a while.