Bitcoin has held surprisingly well over the past hour, despite global markets opening dramatically lower (by traditional standards) than they were during Friday’s close. In fact, the futures for the S&P 500 and the Dow Jones have all hit their limit down (circuit breaker) of 5%, with the former reaching 2,174 and the atter falling to 18,085, per data from TradingView.
With this, the S&P 500 is now more than 35% lower than its high above 3,300, established literally just a month ago. Bitcoin, on the other hand, has fallen 43% from its February high of $10,500 to $6,000, where it trades at as of the time of this article’s writing.
The stock market’s latest bout of weakness, which may affect Bitcoin, is seemingly a result of a confluence of news regarding the spread of the coronavirus-caused illness COVID-19 and the related economic effects of this outbreak. These include but are not limited to:
- A 50% increase in U.S. coronavirus cases from Friday to Sunday.
- The activation of the National Guard in New York, Washington State, and California.
- The Senate’s coronavirus bill failure to “clear the first procedural hurdle.”
U.S. SENATE CORONAVIRUS BILL FAILS TO GET ENOUGH VOTES TO CLEAR FIRST PROCEDURAL HURDLE; VOTING CONTINUES
— First Squawk (@FirstSquawk) March 22, 2020
- A comment from the Federal Reserve Bank of St. Louis President James Bullard that unemployment could reach 30% in the second quarter, with GDP falling by 50%.
No Reason Bitcoin Won’t Follow: Analyst
As the futures are at their limit down, there is no telling how far they could fall during Monday’s trading session, but many think that Bitcoin and the rest of the crypto market should follow suit. Prominent cryptocurrency trader CryptoGainz remarked that the movement of futures is “super relevant” as there is “no reason to believe crypto markets are decoupled and won’t follow.”
Super relevant, no reason to believe crypto markets are decoupled and won’t follow imo. https://t.co/pLU15N8RPB
— CryptoGainz (@CryptoGainz1) March 22, 2020
Indeed, crypto market analyst Josh Rager noted that per data from CoinMetrics, Bitcoin’s correlation with the stock market (namely the S&P 500) has “sustained between 0.5 to 0.6 since the price drop on March 12th,” suggesting any further sell-off in equities will result in a crunch in BTC prices.
Cantering Clark echoed this, explaining that considering the macro backdrop of weak equities, he is “pretty confident we see low $4,000s again.”
Looking to aggressively add to shorts if re-accepted back into 5800 range composite VAH.
Equities likely to get slaughtered this week.
Bitcoin will follow.
Pretty confident we see low 4s again. $BTC $ES $SPX pic.twitter.com/YhF30E4ltP
— Cantering Clark (@CanteringClark) March 22, 2020
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