Coronavirus outbreak and fears surrounding it seem to have nothing to do with the ongoing crypto selloff as prices are pulling back due to overbought conditions according to some analysts in the market.
The cryptocurrency market is absolutely in shambles on the third day in a row. The leading crypto, Bitcoin dived under $9,100 today before finding balance at $9,090. BTC/USD is still down 1.65% on Wednesday and trading at $9,154. Other major digital assets including Ethereum, Ripple and Bitcoin Cash are languishing in losses of 4.1%, 4.78%, and 8.89% respectively on the day.
Chart of the day
BTC/USD daily chart
BTC/USD price chart by Tradingview
Coronavirus fears mounting as cryptos dump
The bloodbath in the cryptocurrency market and especially with Bitcoin negates the belief that Bitcoin reacts positively to global disasters such as the Coronavirus outbreak that has since spread from China to other countries around the world. Bitcoin has in the past grown significantly in value during geopolitical events such as the riots in Hong Kong last year.
However, in less than a week Bitcoin has dumped more than 9% of its value in tandem with the selloff in the traditional stock market in the US, Europe, and Asia. Virus infections are reported to slowing down in China while increasing in other countries such as Italy, the US, and the Middle East.
Analysts such as Cointelegraph’s Michael Van De Poppe believes that the Coronavirus has very little to do with Bitcoin’s dumping and that cryptos are simply overbought following the week-after-week rally. Poppe says that a 10% pullback was necessary to test lower support areas, besides traders are taking back profits. In his view, investors should be ready for another leg up.
In a recent conversation with Delphi Digital CFA, Kevin Kelly, analysts reckoned that:
This market is still highly speculative and conditions can turn on a dime, but taking a step back we are beginning to see some maturation as the level of sophistication across investors and traders increases.
While referring to the above chart Kelly added that:
“The latest rally in the crypto market is quite a bit different from what we saw last year when BTC led most alternative crypto assets. The shift in leadership this year has favored other large and mid-cap names, many of which drastically underperformed BTC over the last year.”
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