Bitcoin Struggles to Hold $5,000 as Coronavirus Continues to Spread
After a short 15% pump on Sunday that came as a result of news from the Federal Reserve, Bitcoin continued lower into Monday morning.
In fact, the cryptocurrency fell from $5,400, where it spent most of Sunday, to as low as $4,800 — a drop of 11% that is depicted in the chart below.
Once again, it seems that Bitcoin’s weakness is a result of a similar decline in the value of equities across the world.
While the oft-cited narrative is that Bitcoin is an asset that is uncorrelated with other equities, what we have seen over the past few weeks is a liquidity crisis, whereas all investors rush for the door with whatever assets they have, even if its a purported safe-haven like gold (which also crashed last week) or Bitcoin.
As of the time of this article’s writing, all indices around the world are blood-red; even after attempts by central banks to mitigate some of the proverbial bleeding, The Euro Stoxx 50, an aggregate of the Eurozone’s top companies, is down 8%, while the futures of the S&P 500 and Dow Jones are down 5%, poised to open in the actual trading day even lower due to limits.
This has seemingly affected Bitcoin, with the open of global markets on Monday correlating with the start of the cryptocurrency’s decline.
What’s Next for Bitcoin?
Unfortunately, most analysts have come to the conclusion that Bitcoin hasn’t stopped falling yet.
Byzantine General, a prominent cryptocurrency trader, recently suggested that with Bitcoin’s strong rejection at $6,000 earlier today and with futures funding rates normalizing back to 0%, there’s a good likelihood BTC has further to fall.
He added that with the current macroeconomic backdrop of pain in traditional markets, BTC is unlikely to recover anytime soon.
The outlook is harrowing even on a longer-term basis.
For the first time in forever, Bitcoin closed its weekly candle under the key 200-week simple moving average — a level that has marked the bottom for bear markets in cryptocurrency on multiple occasions in the past. Simultaneously, it closed below a logarithmic growth curve that supported Bitcoin’s price over the past eight years.
Many analysts believe that the loss of these two key long-term levels marks a strong loss for Bitcoin in the long run.
Even Peter Brandt, a long-time commodities trader that has delved into the crypto game, has expressed concern over the future of Bitcoin.
Responding to someone who asked him if Bitcoin is bottoming in the $5,000s, Brandt remarked that if he looks at the chart of the cryptocurrency “without bias,” he sees a “sub-$1,000” price, which would require BTC to drop over 80% from the current price of $4,900.
If I interpret the chart without bias, I would say sub $1,000
— Peter Brandt (@PeterLBrandt) March 12, 2020
He doubled down on this sentiment in later tweets, explaining that as it stands, Bitcoin has a higher likelihood of hitting $0 than his long-term target of $50,000.
There Are Some Signs BTC is Bottoming
While there are these overarching fears, there is some sentiment Bitcoin is bottoming, at least on a short-term basis.
In messages published to his Telegram channel, Filb Filb gave three reasons why Bitcoin could soon “squeeze up”:
- Bitcoin’s short-term chart has formed a textbook Adam and Eve bottom, which is a good indicator that a bottom is forming and a subsequent reversal will rapidly take place.
- The funding rate on BitMEX, which hit extremes near local bottoms and tops, on Friday reached a ridiculously high level for shorts. This suggests that the market was leaning very short, something often seen near bottoms.
- And lastly, Filb Filb wrote that the “Bid side of the order book has massively recovered,” suggesting there remains buying demand in the crypto markets.
While there are these optimistic signs, again, a further crash in equities markets would likely push Bitcoin even lower than $3,800.
The post Bitcoin Struggles to Hold $5,000 as Coronavirus Continues to Spread appeared first on Blockonomi.
OhNoCryptocurrency via https://www.ohnocrypto.com/ @Nick Chong, @Khareem Sudlow
