Bitcoin [BTC] price seems to be holding on to it’s support levels, showing signs of bulls. While the drop due to coronavirus panic has spread across all investment assets, Bitcoin investors seems to be showing resistance to the sell-off pressure.
This is a novel territory for Bitcoin, many countries are under a complete lock-down, and the economic systems of the world at the placed at the brink of a collapse.
Bitcoin has never known a recession or black swan event and currently is at it’s highest correlation 0.6 with the S&P 500
The S&P 500 index plunged 32.7% from highs near $3400 on 19th February. In less than a month, the bullish view as completely changed and it pointing towards a collapse.
BTC and S&P 500 Index Correlation (Source: Tweet)
On the worst day, Bitcoin plunged about 57% touching lows at $3,800. Given the volatility and history of Bitcoin it certainly has more room below, however, it has held support since then. Moreover, if the situation continues to worsen, the short-term view remains bearish. He added,
I don’t believe Bitcoin pumps yet, if stocks continue to dump
The Price Action in the last two days have been hopeful in terms of breaking correlation with the plunging stock markets. Prominent crypto derivatives trader, TheBoot (alias) tweeted,
Many are asking if $btc has decoupled. I do not believe that. I think it is either:
1. Showing relative strength and is going to pump on $SPX bounce.
2. Just simple lagging for whatever reason.
He expects the first situation to play-out, as the SPX will eventually have a bounce. The stock markets will be looking for a positive correction or a relief bounce soon.
The SPX close yesterday formed a hammer (single candlestick) on a daily scale as traders bought at lows below $2300, which is bullish. SPX closed just below $2400. In case the stock market sees signs of bullish reversal, Bitcoin might pump as well. Nevertheless, due to the continued violent spread of the virus, situations might worsen in a week or so.
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Nivesh from Engineering Background is a full-time Crypto Analyst at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com