What’s happening in the market?
Ever since the pandemic began, countries are taking significant restriction on movement measures to stem the spread of the virus, markets have been reacting violently, many businesses tread into the negative territory and a decline in consumer confidence are expected to take a toll on economic activity. The Institute of International Finance (IIF) has lowered its 2020 GDP forecasts for the US and China to 1.3% and 4.0% respectively. The wide range of the estimate numbers shows the challenge in analyzing how long this pandemic will weigh on the global economy.
Is it time to enter?
Getting the vibes of the 2008 and 2009 crisis? Anyone who has been through that knows that the crisis has presented a fantastic opportunity to buy stocks. But at that point in time, there was a lot of fear and trepidation about the future.
It could be a similar case today. Most investors probably realized from past experiences that the coronavirus-induced crash is a golden opportunity to buy stocks in a generation. But will history repeat, or will it be different this time around?
The “safe haven”
Investors always look to “safe haven” assets, like gold, to retain value when the markets are in turmoil. Strong believers of cryptocurrencies argue that Bitcoin holds a similar place in the financial firmament, as digital gold.
But at this moment, when the safe-haven assets should be holding up, Bitcoin had it’s worst drop in 7 years. On 12 March 2020, Bitcoin’s price dropped from $8,000 to below $6,000, and to a new low of $4,000 on the next day before rebounding back to $5,000.
Just like stocks, cryptocurrencies are a test of the investor’s capability to hold through the market turmoil.
A better alternative?
One of the biggest differences between Forex and stocks is the sheer size of the Forex market. Forex market’s estimated daily traded volume is around $5 trillion a day, while the stock market average at about $200 billion per day. Most of the volume is concentrated on major pairs like EURUSD, USDJPY, GBPUSD, and AUDUSD.
One reason that deters investors from investing in Forex is the fact that around 96% of Forex Traders lose money. It is extremely hard for beginners to stand firm in the highly volatile Forex market.