Bitcoin has yet to decide on a definite short-term direction following a weekend of very little activity as the world waits to assess the fallout in the markets from the ongoing coronavirus pandemic. With institutions still having thousands of Bitcoin on exchanges, could more selling be on the cards?
Short-term Support Broken
Bitcoin went into the weekend around $6,200 and ended it a little under $6,000, illustrating that a definitive direction has yet to be identified. On Friday we posited the theory that it could be at the start of a short-term uptrend given a couple of higher lows and higher highs following the recent crash to $4,450, but this support line was swiftly broken yesterday, leaving us in limbo:
The Crypto Fear and Greed index still has us at extreme fear, which has been the case since March 14, representing the longest ‘extreme fear’ period since it began recording in February 2018.
Buy the Blood?
Normally such bearish sentiment would give rise to suggestions that now is a good time to buy, but with global markets in such a precarious position at the moment it would take a brave person to buy here with confidence.
Chainalysis revealed last week that the crash to $3,850 two weeks ago was caused by whales and institutions de-risking, which suggests that much of the selling could therefore be over and a bottom could be in. However, part of this research also revealed that, at the time, between ₿40,000 and ₿240,000 remained unsold on exchanges, which suggests that many are ready to press the button should a worsening global situation warrant it.
Bitcoin’s Correlation Debate
Bitcoin’s correlation or otherwise to traditional markets has been long debated, even more intensely during this recent downturn. Even if the asset itself is not correlated, market sentiment is likely to have as much of a negative impact should there be further collapses in the world’s top stock markets.
Talk of a long-term global recession has only gathered as the West gets hit more and more by the coronavirus shutdown, and with money inevitably becoming tighter, fewer and fewer people will have the ability let alone the desire to buy Bitcoin, halving or no halving.