Bitcoin slides below 6000 USD mark
Every Monday… It is a familiar picture during the coronavirus crisis: The traditional markets start the week with enormous price drops and the crypto market follows this downward trend. We take a look at the current events.
Bitcoin price in detail
Bitcoin starts the new week with a price loss of a whopping 7 %. At the time of this article, the BTC price is at a value of 5837 USD. This means that the support area turns around at 6000 USD and turns into the new resistance. From the bearish perspective, the next major support line is now at 5500 USD.
Bitcoin follows stock markets
The term “Black Monday” is gradually establishing itself in crypto space as well. Insecure investors are reacting to the negative headlines of the traditional markets with panic selling. On Monday, the Down Jones Industrial stumbles into the week with an enormous downtrend of about 5%, while the DAX struggles at the 8000 point mark. The U.S. stimulus package is now coming into focus for investors. A first draft was rejected by the Democrats on Sunday. The only glimmer of hope that stands out is the Nikkei 225 with a daily gain of approx. 2 %. The Olympic Games have not yet been cancelled.
Correlation between BTC and stock markets
Current chart trends indicate a strong correlation between Bitcoin and traditional markets. This is supported by the “low” overall market capitalization of cyber-currencies. With a market cap of approximately USD 108 billion, “digital gold” continues to represent a niche in international comparison. Although independent price outbreaks in the previous week indicated an encapsulation, one cannot assume a crisis-stable store of value for the time being. The influence of the coronavirus pandemic is having an impact on all markets and investors cannot refer to any reference values, as Bitcoin did not yet exist during the financial crisis in 2008.
Bitcoin dominance index still high
The focus of crypto investors is clearly on the number one crypto currency. With a Bitcoin Dominance Index of 65%, the forces in crypto space are clearly distributed. The Altcoins’ hands are tied in the current situation, isolated outliers are considered an absolute rarity.
Altcoins follow Bitcoin
The alternative assets follow the Bitcoin also on Monday. Ethereum is trading at around 123 USD, hopes for an Ethereum 2.0 launch in the near future are of little consolation at the moment. The long awaited transition from “proof of work” to “proof of stake” could fade away due to the consequences of the coronavirus pandemic. The same applies to the Bitcoin Halving Event. In the Top 50, almost all coins are experiencing a single-digit percentage decline in price. In addition, the total market capitalization is falling to a value of approximately USD 165 billion. Insecure investors are pulling their money out of the highly volatile crypto market.
Bitcoin cannot (yet) break away from the traditional markets. The crypto-space as a marginal niche is probably still too small for encapsulation. However, one should not forget the high volatility and the possible consequences of FOMO (fear of missing out). In the current situation, however, valid forecasts are impossible.