Will Dow Bounce Back As Everybody Hopes? Or Is It Going To Stand Still?

The past 30 days were absolutely vicious for the global economy. As the Coronavirus fears keep developing, global markets are plunging with no end in sight. Some of the countries’ economies are essentially put on halt.

Dow Jones was hit especially hard. By the end of January, it had a 1200 point drop, which was regarded as the “single biggest drop in history”. Little did we know that it would be only the start of a series of massive drops that would make even that one tiny in comparison. Monday marked the day when Dow dropped by 3000 points, which is absolutely mind-boggling. 

The damage was done high and wide, almost invariably in all industries. Even Bitcoin suffered heavy damages, and many people are losing faith in it. Bitcoin, for the last few years, was heavily used for newer and more different purposes online, and one of them is online casinos, due to Bitcoin’s advantages of privacy and security. Recently, according to Nigel Brown, head of the analytics department at Playamo online casino, many of their online platforms have been seeing huge increases in the payments made by Bitcoin. With the prices going so far down, many people are feeling more apprehensive about saving their assets in Bitcoin, and are just looking for a way out. Even something that was considered to be as prospective and hopeful as Bitcoin is suffering due to these circumstances.

How did we get to this point? What are the actual causes, and can anything be done to remedy the damage, let alone stop it?

What are the reasons?

The absolute biggest reason why this is happening right now is because of how people are reacting to the ongoing events. With the situation developing as rapidly as it is, this virus has become the number one thing that’s occupying people’s minds. Fear and mass hysteria have overtaken rational thinking, and everyone’s aboard the panic train. This is not to imply that there’s no cause for concern or safety. The issue is quite serious, with the potential to severely alter whole humanity’s life for the worse, but it’ll only happen if we fail to respond to it, which definitely won’t happen. There are thousands of qualified people who are in charge of tackling the issue, and they’re doing an amazing job at it. There definitely is the cause for fear, but not as much fear.

How did we get to this point, and what is the cause for people to be worrying so much?

Media’s portrayal

Media is definitely, without a doubt, one of the main culprits behind people being so fearful and scared. The way they’re covering the ongoing events is nothing short deliberate of fear-mongering. With the dwindling ratings of TV news and broadcasts, they’re doing everything in their power to ensure that there’s a lot of traffic and responses from people.

Upon examining the footage objectively, it’ll be really easy and apparent to see that much of what the media is portraying is quite over-dramatized and blown out of proportion. Instead of helping people maintain a clear and calm head while encouraging preventative methods like personal hygiene and reasonable isolation wherever possible, they conduct campaigns of deliberate fear-mongering.

It’s a rather sad state of affairs, as massive damage is done to people’s mental well-being and the global economy in exchange for the benefit of the few.

During these times, it’s a responsibility for all of us to remain calm and collected, and not let the fear and panic overtake logical thinking.

Oil wars between Russia and Saudi Arabia

The other massive factor in the recent plunges is undoubtedly the economic conflict between Russia and Saudi Arabia that occurred due to their disagreement on the issue of Oil production. Saudi Arabia has been trying to get Russia to decrease its oil production for quite a while now and warned them that it’d dramatically increase its production and decrease the prices by around $6, but Rusia wasn’t budging. Turns out Saudis weren’t bluffing, and the rest is history.

Almost immediately after the price change, Dow started falling down dramatically, and the rest is history. This has shown us how fragile the global economy is, due to its heavy reliance and attachment to oil prices.

So, What now?

There are conflicting views as to what’s to come after these market events. Some experts believe that the end to these economic damages is not even close yet. Others believe that as there is more clarity and hindsight regarding the coronavirus and how it works, it’ll get progressively easier and more manageable. The warming of the weather as the summer approaches will also play a role in alleviating some of the damage.

However, it’s not that easy. It’s a rather complex and multifaceted issue that is dependent on a multitude of factors.

The truth is, despite the fact that Dow has surged and recovered a bit in the past weeks, it did have a 3000 drop shortly afterward, so, with the level of volatility that’s taking place, absolutely no one could make a reasonable prediction.

The US is still to take any major measures in terms of mass quarantines and state of emergency, and as the numbers have shown with these events in other countries like Italy and South Korea, it’s likely to keep going down significantly.

The mass cancellation of public events that have already taken place and with the amount that will be taking place in the future, will all be taking their own toll on people’s psyche and confidence, thereby reflecting on the markets. Therefore, the pessimistic estimation that these huge damages that we have seen are only the peak of the iceberg does have a degree of truth to it, no matter how disconcerting this news may be.

With that being said, it’s the responsibility of each and every one of us to remain as calm as possible. Worrying and panicking changes absolutely nothing, and only makes things worse.