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The Nasdaq continued to fall to its highest level on March 12, 2018. The Nasdaq is down nearly 10% from the top on a variety of news. The Nasdaq, which tracks technology stocks, has suffered under the weight of massive losses in market capitalization of Facebook, Amazon and Twitter. The causes, which we will discuss later, are twofold. Typical American fashion, they revolve around Donald Trump.
Trump's first spin on the Nasdaq was the endless controversy on Facebook. Facebook continues to suffer the fall of the Cambridge Analytica scandal. Here's how the story unfolds:
- Aleksandr Kogan, a data scientist, develops a Facebook polling app called MyDigitalLife. MyDigitalLife amasses 300,000 users and has access to data from more than 50 million of these users.
- Cambridge Analytica employed Aleksandr Kogan and used this data to create personality models on these 30 million Americans
- The company was then able to use Facebook's organic action: likes, actions, and comments to target "persuasive" voters, leading to the election of Donald J. Trump
- Christopher Wylie gives the whistle on Facebook, the fallout ensues.
In the days following Wylie's staggering accusations, Cambridge Analytica and Facebook both vehemently denied these accusations. Nevertheless, the harm is done: Wylie and Zuckerberg testify before Congress, and Zuckerberg was invited (and refused) to appear before Parliament; Cambridge Analytica is under investigation by Nigeria for the role it has played in their elections, and Palantir has launched an internal investigation into the connections of its own employees to Cambridge Analytica (a subject sensitive to a possible IPO).
All this chaos has certainly damaged Facebook's stock. Since the scandal broke, it has dropped more than 15%. The fallout from the scandal extends beyond Facebook and is reflected in the social media sector with Twitter after Facebook: the stock is down 22% (despite the fact that there is no has no data leak). The scandal has, of course, raised broader questions about the sustainability of the business models of the many tech giants and media outlets on the Fortune 500 list and shows no sign of stopping.
The retail giant Amazon is still hanging out on the Nasdaq. Amazon is the latest in a series of businesses (62, to be exact) that Trump attacked on Twitter. Trump has threatened to increase transportation costs to hurt Amazon, and is even saying that he would be exploring antitrust actions against Amazon. Some speculate on the true source of the president's anger is the property of Amazon CEO Jeff Bezo of the Washington Post. Sources told the Washington Post that "Trump does not like the New York Times, but he venerates it because it's his local paper. The Washington Post, has no respect for. "Essentially, Trump leads a personal war against Bezos.What they like or hate, the stock market reveres Donald Trump This reverence is evidenced by Amazon's 8% drop in the last month.
The collapse of the Nasdaq is expected to continue over the next few weeks and the market as a whole is expected to remain stable. So what does it mean for crypto? I've tried to answer the question of how the stock market affects crypto-markets in my previous article "How Today's Stock Markets Will Affect the Cryptocurrency Markets" and Resume analyzed my conclusion in another article later this month. The conclusion that I arrived at, comparing the VIX and Bitcoin and concluding that, as the market works better, so Bitcoin. So what's going on here? How can the entire crypto market be up when some of the biggest headlines show a double-digit drop? Fundamentals.
My previous article was based on a technical analysis of the market. It turns out that this rise could have something to do with blockchain applications rather than with the markets themselves. At the end of last month, CCN contributor Gerelyn Terzo wrote an article examining how blockchain could solve the problems that plague centralized data systems like Facebook and allow users to recover their data. These same sentiments were echoed by the New York Times, CNBC, CNN and virtually every other mainstream media. This in addition to the broad market sentiment that all crypto is undervalued at current levels, additional credentials of crypto and even lawsuits against Google, Facebook and Twitter to ban cryptocurrency advertising combined to create market conditions for a rally . We could even begin to see the move from crypto a risky asset to a hedge against centralized technology stocks that I described when the Dow Jones made a significant slowdown last month. Only time will tell, but it seems that the whole market feels pretty good about crypto right now.
Image from Shutterstock.
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