President Trump and the White House Coronavirus Task Force’s uplifting daily press briefing on Sunday (April 5) plus declining COVID-19 related mortality rates in various regions around the world seem to have increased investors’ appetite for risk, with both U.S. stock futures and Bitcoin currently up around 4%.
So, what are the reasons for investors in stocks and cryptocurrencies to be more optimistic?
Well, let’s start with this past weekend’s press briefings at the White House.
At Satuday’s briefing, Dr. Deborah Birx, the White House coronavirus response coordinator, said that she expeceds counties in New York, Detroit and New Orleans to see a peak in COVID-19 cases in the next few days.
And at Sunday’s briefing, President Trump referred to New York State’s first drop in the number of coronavirus-related deaths as a “good sign”, and said that he and the task force could see “light at the end of the tunnel.” As for Dr. Birx, she also seemed optimistic:
“We’re very hopeful that over the next week… we’ll see a stabilisation of cases across these large metropolitan areas where the outbreak began several weeks ago.”
Later at the same briefing, she went into more detail about why the task force was hopeful:
“We are hopeful because last time I was here I wasn’t able to really tell you that Italy and Spain were coming across their apex and coming down the other side…
“To me, that’s extraordinarily hopeful. They just completed four weeks of really strong mitigation, and I think that our word to the American people is we can look like that…
“So, that’s what the promise is. The promise is if we do this, we could potentially be better.”
On Sunday, we also heard from New York State Governor Andrew Cuomo, who said during his daily press briefing
that coronavirus-related deaths, ICU admissions, and daily intubations had all gone down, while the hospital discharge rate had gone “way up.”
Also, this week, there is a good chance that Saudi Arabia and the Russian Federation will agree to end their oil price war, which would benefit the U.S. oil industry, therefore helping to drive up both the Dow and the S&P 500.
At the time of writing (09:30 UTC on April 6), premarket trading data shows the Dow, S&P 500, and Nasdaq futures up 3.64%, 3.69%, and 4.00% respectively
As for cryptocurrencies, even though several major central banks have already launched massive quantitative easing programs in a bid to fight the economic threat posed by COVID-19, the growing realization that much more “money printing” will probably be needed in the future to stop the global economy from going into a depression could be enough to convince at least some investors to look at hard assets such as Bitcoin and gold.
Michael Novogratz, a former Goldman Sachs partner, as well as Founder, Chairman, and CEO of crypto-focused merchant bank Galaxy Digital, talked about his high hopes for both Bitcoin and gold in a tweet he sent out on March 24:
Gold is almost back to it highs. I believe it’s going much higher. Let’s go $BTC. Get on your horse and ride. Same thesis.
— Michael Novogratz (@novogratz) March 24, 2020
According to data from CryptoCompare, Bitcoin, which has been having a pretty close correlation with the S&P 500 during the COVID-19 crisis, is currently trading at $7,129, up 4.59% in the past 24-hour period:
Last Friday (April 3), asset management firm VanEck released an Investment Outlook report titled “Bitcoin Correlation to Gold Jumps in 2020” that offered the following key takeaways:
- “Long-term, bitcoin correlations with traditional asset classes remain low.”
- “Short-term, the market sell-off induced by the COVID-19 pandemic increased bitcoin correlations with traditional asset classes—particularly gold, potentially hinting at bitcoin’s increasing safe-haven status.”
- “A small bitcoin addition to a 60% equity/40% bond blended portfolio significantly reduced portfolio volatility during the recent market sell-off.”
