The COVID-19 ‘Black Thursday’ crash on March 12th began a strange, but strong positive correlation with the stock markets (0.6 at the peak) which now seems to be fading away. Moreover, the uptrend in both assets in the following weeks despite bearish sentiments further baffled the traders. Fundamentally, Bitcoin is looking to poise itself as a hedge against the crisis, but stock markets and recession in the economy threaten another blow-out in prices.
The Chairman of the U.S. Federal Reserve issued an alarming warning on the onset of recession in the economy. He addressed the media,
“The record shows that deeper and longer recessions can leave behind lasting damage to the productive capacity of the economy,” Powell said. “Avoidable household and business insolvencies can weigh on growth for years to come.”
Powell indicated the onset of negative interest rates and increasing the spending of the Feds to deal with the massive shock due to Coronavirus.
While Trump believes that the economy could snap back into recovery mode as the worldwide lock-down ends, Powell expects more lasting impacts. The SPX index plunged over 20 points yesterday post his address, down 4.01% on a weekly scale. The Dow Jones index plunged 2.17% with a 516 point drop.
Bitcoin Halving Causes Stock Market Decoupling
Bitcoin, on the other hand, is up 7% on a weekly scale as it revisits bullish territory with a 7% rise on a weekly scale. It gained over 5.58% yesterday, despite the downtrend in the stock markets.
While decoupling have been established in the short-term, Mati Greenspan, financial analyst and founder of Quantum Economics apprehends a pullback. According to him, halving has caused non-correlated moves in Bitcoin price. He tweeted,
If nothing else, the # has decoupled bitcoin from the stock markets. Since the event, orange coin is up 8% while the US stock market is down 4%.
The price of Bitcoin [BTC] rose to a high of $10,075 four days prior to halving on Monday. Nevertheless, it witnessed a deep pullback on Sunday moving into halving at a price of $8550. BTC price at 4: 30 hours UTC on 14th May 2020 is $9350.
There is massive volatility in Bitcoin price at the moment, which gives rise to uncertainty. And, the bearish sentiments could invoke the risk component around Bitcoin as well. Greenspan notes in his daily newsletter,
Of course, as has been the case from the beginning, the virus is firmly in charge of the markets now, so a spike in case data or other risk events like overwhelming mortgage delinquencies or major bankruptcies could see the correlation snap back in a moment.
How do you think the markets will perform after the unemployment numbers at the end of this week? Please share your views with us.
- Will McDonald’s Accept Dogecoin Following Elon Musk’s Challenge?
- Bitcoin’s Positive Correlation With The Stock Market Index Records A Mild Increase
- Breaking: Elon Musk Bets McDonalds to Accept Dogecoin (DOGE) As Payment
- T-series And Hefty Entertainment join forces with Hungama to delve into Web 3.0 to create NFTs
- Ripple Objects To SECs Request To Buy More Time Following Recent Court Ruling
- OpenSea’s Meteoric Rise May Trigger An Ethereum Crash, Here’s Why
- Breaking: JPMorgan Closes Uniswap (UNI) Founder’s Accounts
- UBS Warns Of Apocalyptic Crypto Winter And The Cryptocurrency Prices Are Poised To Crash
- SOL Tanks 6% As Solana Faces Another 48 Hour Outage, Boom and Bust Moment for Solana?
- Fantom (FTM) Surpasses Avalanche and Solana as DeFi TVL Crosses $12 Billion
- Solana Creeps Higher, Looks To Revisit January Highs AT $177.0
- Ethereum Price Analysis: Fibonacci Retracement level 0.618 Triggers Recovery Rally In ETH Coin
- BTC Price Analysis: Death Crossover Brings Nightmares On Satoshi Street; Is This A Buying Opportunity?
- Bitcoin Death Cross Haunting Investors, Will BTC Make or Break?
- DOGE Price Analysis: Highly Influential Bearish Trendline Undermines Bullish Attempts; Buy, Sell Or Hold?
- Terra Price Analysis: Will LUNA Price Bounce Back at 0.382 Fibonacci Retracement?
- SAND Price Analysis: Sandbox Price Losses 50% Retracement Level, Good Time to Buy?
- LINK Price Analysis: Chainlink price reclaims 200-day EMA, Emerging trendline Suggests More Upward Price Movement
- Harmony Price Analysis: Rising Parallel Pattern Could Lead 30% Growth In $ONE Price
- Ripple Price Analysis: XRP Bears Struggle To Breach $0.7 Support Zone, Is A Reversal Next Move?