Bitcoin has recovered nearly 90% from the COVID-19 drop from $7950. The drop to $3850 was quickly bought (in less than an hour) which showed the first signs of bottoming and presence of interested buyers.
The price of Bitcoin [BTC] at 5: 30 hours UTC on 7th April is $$7280.
Moreover, the Gold price recovers entirely from the COVID-19 shocks which caused a drop from highs above $1675 to $1450 in a weeks time. The SPX index has also shown positive moves from lows around $2,200, currently trading at $2665.
As the world begins to show positive trends in the coronavirus pandemic fight, the V-bottom formation in these assets is beginning to form bullish sentiments. However, since the economy has come to a standstill, the fear of a drop in the equity markets is still prevalent.
Ever since the drop, Bitcoin was exhibiting strong correlation with the stock markets with the narrative of a risk asset. Nevertheless, the recovery in Gold and Bitcoin has been stronger than the positive moves in SPX.
Moreover, the fundamentals are not the same for Bitcoin and Gold. As reported earlier on CoinGape, the de-coupling of stock markets and safe-haven assets is likely to be bullish for Bitcoin as well.
Visualising what a 50% pull back in BTC price looks like in the bigger picture next to Gold and S&P500.
This is Bitcoin weathering the biggest crisis we’ve seen perhaps since the Great Depression… the first big test of its safe haven properties.
Fear and Blood
Before the drop, both Bitcoin [BTC] and SPX were riding a strong bullish momentum. Nearly $1.4 billion in Bitcoin longs were liquidated at BitMEX alone in the drop. The Open Interest and futures trading volume also dropped significantly.
Plentiful liquidations were witnessed across the stock markets as well. Dan Tapiero, a financial analyst and founder at DTAP Capital tweeted a data on Mutual Fund collapse in the fall.
As the market sentiments still seem to hold a mid to long-term cautious view in the aftermath of the crisis, he said,
Some have suggested in previous threads that there is currently not enough “blood in the streets.” Perhaps, but on this metric, 08 looks like a little dip. Plenty of fear and “blood” accompanied this liquidation. Rates staying at 0, gold and #Bitcoin to benefit.
Which asset do you think is the more strongly correlated with Bitcoin, stocks or gold? Please share your views with us.
Disclaimer The views, opinions, positions or strategies expressed by the authors and those providing comments are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of CoinGape. Do your market research before investing in cryptocurrencies. The author or publication does not hold any responsibility for your personal financial loss.
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