Bitcoin and other altcoins sold off sharply last week as they followed traditional market fears. It was unconventional price action for Bitcoin, as BTC has historically hedged traditional market turmoil. The cryptocurrency markets recovered to start the week with Bitcoin posting +3.68% gains the last 24HR. Dow Jones surges +5.1%, largest single day gain since 2009 – was this pre-mature?
Traditional Stock Markets
The stock market has experienced high volatility to start the week. Last week marked the worst performance since the financial crisis, so volatility to start the new week was much expected. There’s still a lot of uncertainty in the market. We saw this last night ( Sunday ) with world futures. Yesterday around 6PM EST, market futures were down nearly -700 points.
Quick Sentiment Change, Raises Concern
Last night, futures opened up down significantly and the sentiment all of a sudden changed rapidly in just a couple of hours.
News started to surface regarding the Federal Reserve potentially lowering interest rates in March to fuel the economy. Many people see this as a positive indicator, but if Coronavirus continues to spread it could be an irrelevant move by the Fed, and more of a PR stunt. Lowering interest rates does not fix production facilities and supply chains that are struggling during the outbreak. Traditional markets may be overreacting a bit today with posting 700+ point gains. As additional news surfaces around the outbreaks, it may cause more turmoil in the markets. This didn’t seem to worry investors on Monday, as the Dow Jones surged +5.1% which is the highest one day run since 2009.
Coronavirus News Hasn’t Gotten Better, Yet Stocks Rallying
Over the weekend there was a lot of news regarding virus outbreaks entering the US. With stocks rallying today, investors are buying stocks based on additional news developing around:
- 2nd person dies in the United States
- 13 positive cases in Washington
- Virus outbreak enters Tampa Bay, Florida – Florida declared emergency
- Total infections approach 90,000
Bitcoin and Altcoin Markets Rebound
Last week we outlined in Bitcoin market analysis that Bitcoin failed to serve as a global hedge. It sold off with traditional markets as global uncertainty continued to mount. As believed, despite BTC price being historically uncorrelated to traditional markets, a potential global pandemic is a different scenario. In this scenario it was clear that investors were accumulating cash last week to reduce overall risk. The chart below displays the Bitcoin price action last week which mirrored the S&P500.
Gold as also outlined on this chart, since it was also experiencing uncharacteristic price action. With traditional markets rallying to start the week, we have seen the change in sentiment for both Bitcoin and Gold. Bitcoin price and Gold price are now mirroring the S&P500 to the upside. We will see if anything changes this week. If traditional markets were to enter correction mode again this week, it will be interesting to see what BTC and GLD do. Below you can see that Bitcoin, Gold, and the S&P500 literally have the same price action to start the new week. It’s quite interesting, as people used to make fun of the fact that altcoins follow Bitcoin so closely. Now we have a scenario where Bitcoin, Gold, and the S&P500 are moving in the same direction. What a crazy time!
Bitcoin Technical Analysis
Very few people were expecting the Bitcoin sell-off below $9,400 levels. As we mentioned in previous Bitcoin technical analysis , we saw $9,400 levels being a possibility on the downtrend. Right now BTC is hovering around $8,600 which is a very important support level. It’s also where the 200 day moving average line resides. You could see that Bitcoin price is holding the $8,600 level and trying to build additional support at that level. It seems like Bitcoin may be testing $9,415 to the upside.
On the flip side, it will be crucial for Bitcoin price to hold $8,600 levels. If it fails to do so, there will be many investors selling and watching from the sidelines for the time being it appears. Dipping below $8,600 could mean a potential $7,850 test to the downside. For now, it seems $9,415 will be the short-term target, but it will all depend on mainstream media and how the Coronavirus is presented throughout the week. It’s too premature to project what Bitcoin price will do if traditional markets go back into correction mode.