I can’t decipher if Bitcoin is correlated or inversely correlated to the equity markets. I can’t decipher if Bitcoin is correlated or inversely correlated to the safe haven assets like gold, the Japanese Yen, etc. I’m so confused, but one thing I’m not confused about is that in the past several weeks, Bitcoin has been correlated to the equity markets.
Back in early March, The COVID-19 infected people in over 100 countries and killed more than 4,000 people. It was on March 11th that the the World Health Organization announced COVID-19 was now a pandemic. The following day, the equity markets began to fall and when the equity markets started to fall like a brick, Bitcoin followed in tandem.
Investors were forced sell their profits in their profitable positions like gold and bitcoin because of margin calls in the equity markets.
While the equity markets have retraced about 50%, Bitcoin has retraced almost 100%.
Now I think a larger part of the move back up is due to the Bitcoin Halving event coming up in two weeks. Bitcoin Halving is where the number of generated Bitcoin rewards per block is cut in half making the supply and demand of bitcoin a bit more imbalanced. Meaning the less Bitcoin available, the more demand there is for bitcoin, thus the higher price. And usually prior to the halving, the Bitcoin price tends to move higher in anticipation of the event.
After trading in the $6,900 to $7,250 range for more than 19 days, Bitcoin (BTC) price finally managed to pierce the $7,250 resistance in a high volume surge which resulted in the liquidation of nearly $70 million worth of shorts at BitMEX.
The strong upside move allowed the digital asset to secure a higher high at $7,738, a price not seen since before March 13 when the Bitcoin price crashed to $3,750.
With just 18 days to go before the Bitcoin halving event, traders and hodlers will both be wondering whether this is the long awaited pre-halving pump or just another short squeeze that moved the price up a step before attempting to tackle $8,000.
It's funny how bitcoin prices are right below the $8100 daily supply, which was the origin of the massive drop in price on March 12th.
With the equity markets hovering around that 50% retracement, are we going to see another leg down, breaching the March low? If that was to pan out, BitMEX CEO Arthur Hayes aka “Crypto Capo” predicts bitcoin could plunge to $3000. If funny how right below that level is a weekly demand zone.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
