Cryptocurrency markets have sold off drastically the last 24HR, as Bitcoin price has dipped below $8,000. The large sell-off started Sunday morning and continued throughout the day. In addition to Bitcoin, a majority of the altcoin market followed Bitcoin price action. The sell-off came during a drama packed Sunday where news surfaced regarding potential “oil wars” and Coronavirus outbreaks in Italy resulting in 12,000,000+ individuals being quarantined.
Among a list of all cryptocurrencies, Bitcoin and a majority of the markets have been in the deep red on Sunday. Bitcoins market capitalization has fallen around $21B as of recent, which raises many concerns. Many market “analysts” were predicting Bitcoin rallies in early 2020, due to its upcoming halving. Bitcoin price has struggled to do so, actually mirroring traditional market downside as of late. The last 24HR, the following cryptocurrencies have seen large drops:
Bitcoin Price And Traditional Markets
Bitcoin price action this morning seemed to be foreshadowing traditional market sentiment going into this week. The stock market is coming off a rough week where it saw the Dow Jones swing 1,000 points on multiple occasions. The S&P500 has dropped nearly -9% year to date. In addition, other sectors such as industrials, materials, financial, and energy have all seen double digit losses as the market is very uncertain right now.
Bitcoin price dropped heavily this morning, and continued the trend throughout the day. As of recent, Bitcoin price has been following traditional markets to a tee. As we mentioned in a previous market analysis, BTC has not been serving as a “global hedge.” It’s actually been following traditional markets to the downside, as the market has allocated more cash positions during potential “market turmoil.” It was interesting to see BTC price fall sharply this morning. Based on its track record the last couple weeks, it seemed to be falling due to major headlines. By the time Stock futures rolled out at 6:00PM EST, it was an accurate theory as the market was absolutely tanking going into Mondays trading session. This provided clarity as to why Bitcoin price was falling sharply throughout the day.
Earlier on Sunday, it was reported that Italy reported another 133 deaths and was in the process of placing nearly 16 million people in lockdown. With Italy locking down 16 million people, that essentially means that they were containing nearly a quarter of their population. Despite talks about outbreaks potentially slowing down in China, the developments in other geographic regions are troubling. Bitcoin price started falling sharply this morning when stories on Italy lockdowns were being released. As market futures rolled out later in the day, it seems to be playing a role in market sentiment going into the new week.
Potential Oil Wars
On Sunday, Oil prices suffered some of the steepest drops in history. US oil prices fell around -30% and were trading at a 4 year low around $30 / barrel. Another global benchmark, Brent crude also fell around -23%. This all came to fruition after Saudi Arabia stunned the market by initiating a price war against Russia. This development followed Fridays news headlines where the OPEC and Russia oil alliance started falling apart.
On Sunday, it was also reported that 10 year Treasury Yields had dipped below 0.50% as the market was entering panic mode. In a previous report by Visionary Financial we mentioned the implications of falling yields. The 10 year treasury has historically been a great indication of investor sentiment. As more demand flows into safe haven asset assets such as treasuries, the yields go down. This is a clear sign that investors have been flocking to safe assets during a time of global fear. Treasury yields actually started to foreshadow this narrative last year when the yield curve inverted, but many wall street firms completely disregarded the fundamentals due to being focused on other areas that were flourishing at the time.
Bitcoin Technical Analysis
In previous Bitcoin price analysis, it was evident that Bitcoin price could test $7,850 levels if $8,600 levels were not held. With Bitcoin recently dipping below $7,850, it’s safe to say that the analysis was quite accurate. Based on the momentum right now, Bitcoin may be testing $7,550 on the downside. With world futures looking ugly right now, this could very well come to fruition. On the technical side, it was unfortunate to see Bitcoin dip below the 200 day moving average. Many chartist were expecting a large move up after bitcoin accomplished the 200 day moving average. At the end of the day, many people were not predicting an environment where potential “global pandemics” take control. It will be interesting to see how Bitcoin price reacts this week. With the way things have been going, it’s expected that Bitcoin price will follow traditional markets during a time of steep global uncertainty.
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