Good news in COVID-19 drug trials, Dow surges 532 points, Bitcoin outperforms S&P500

On the 29th, the U.S. stock market closed with a significant increase, with the Dow rising more than 532 points and the S&P 500 reaching a 7-week high. Bitcoin also surged by over 17%, outperforming the S&P 500 for the first time since the major sell-off in March. Foreign media pointed out that the main reason for this was the successful testing of Gilead's pneumonia drug, injecting confidence into the U.S. stock market; while Bitcoin's surge may be attributed to the upcoming halving of block rewards in 12 days.

• Bitcoin regains lost ground, returning to pre-crash levels
• U.S. GDP experiences its first decline since 2014

Bloomberg's Annual Forecast Dims

Despite the impressive performance in the financial markets, Bloomberg's annual forecast points out that the U.S. economy shrank by 4.8% in the first quarter of 2020, marking the largest decline since the 2008 financial crisis. This is the first recession since 2014.

Bloomberg's analysis predicts a 37% chance of an annual recession, with the current quarter expected to be even worse. UniCredit bank even forecasts a 65% chance of a recession. Bloomberg indicates that despite government policies, there is still a risk of bankruptcies for businesses of all sizes, reduced consumer spending due to the pandemic, which will increase debt burdens and uncertainty in employment.

The report from the Bureau of Economic Analysis (BEA) under the U.S. Department of Commerce also states that the U.S. GDP in the first quarter declined at an annual rate of 4.8%, the first contraction since the first quarter of 2014 when GDP fell by 1.1%.

Crypto Market Cap Recovers to Pre-March Plunge Levels

Amid the strong performance of the U.S. stock market, even Ethereum founder Vitalik expressed surprise. He tweeted that the S&P500 index has returned to October levels last year. As of the time of writing, the S&P500 was at 2939.51 points, up by approximately 3%.

Significantly, the cryptocurrency market has also rebounded in tandem with traditional finance, with the overall market cap returning to pre-March levels. As of the time of writing, the total market cap stood at $252.1 billion, which was close to the $253.5 billion on March 8th.

TheBlock also noted that since the mid-March sell-off, the stock market has consistently outperformed Bitcoin, but this trend has now reversed. The U.S. stock market peaked on February 20th with the S&P500 index closing at 3396 points, while Bitcoin was priced around $9,600 at that time.

As shown in the following chart, after the sharp drop on March 13th, Bitcoin's return rate plummeted to -50% on March 16th, while the S&P500 return rate hit -35% by the end of March. With prices stabilizing and recovering, the S&P500 return rate has improved to -14.01%, while Bitcoin's price rebounded even more rapidly, with a return rate of around -13.85%.

Fed Chair: We Have Unlimited Money

In response to the uncertain global economic situation, the Federal Reserve has just concluded a two-day monetary policy meeting, announcing that the benchmark interest rate will be maintained near zero. The Fed's statement also emphasizes that the "current ongoing public health crisis poses considerable risks to the medium-term economic outlook." Fed Chair Jerome Powell issued a warning:

Second-quarter economic data will reveal "unprecedented" damage from the coronavirus, with the economy plummeting at an astonishing rate. However, as lockdown restrictions are lifted, the economy will rebound. We will continue our commitment to unlimited purchases of U.S. Treasuries and other assets to maintain stability in the global markets.

Jerome Powell stressed, "We will not run out of money; this is an unlimited pool," and pledged that the Fed will continue to support economic recovery.