Bitcoin dives 8% as S&P 500 futures see tepid open after strong rally
The rally, unfortunately, did not last for long. After rallying to $7,000 and holding above this key psychological price point for all of five hours, Bitcoin has plunged. In the past three hours, which comes as the critical weekly candle ends, the cryptocurrency has shed more than eight percent, tumbling from the highs at $7,200 to a low of $6,580.
This is far below the hundreds of millions liquidated last month but still more than the $14 million liquidated during the crash from $7,400 to $6,900 seen in the middle of the chart above.
It appears that Bitcoin’s recent drop is a result of its ongoing correlation with risk assets, namely the American stock market in the S&P 500 index.
After a strong bounce from the capitulation lows, which coincided with an impressive Bitcoin rally from the $5,000s to a high of $7,470, the futures price for the S&P 500 has shown signs of weakness, down nearly two percent on the session as of the time of this article’s writing.
Prominent investors expect the stock market to fall further as the economic reality of the coronavirus crisis continues to set in, with Guggenheim’s CIO Scott Minerd calling for a 40% correction of the S&P 500 to 1,500 points, suggesting Bitcoin, too, could fall.
While there’s no guarantee the stock market will continue to fall from here in the short term, crypto traders are preparing for some imminent downside in Bitcoin.
In the three hours since the drop began, BTC-denominated open interest on BitMEX’s Bitcoin market has risen by approximately 3,000 coins from 71,000 to 74,000 while the price has sunk, Skew.com data indicates.
Although it isn’t clear what side traders are taking, short-selling seems to be ramping up as TensorCharts indicates that throughout this drop, the predicted/expected funding rate on BitMEX positions has fallen from -0.0112 percent per eight hours to -0.0363 percent. This suggests there are outsized shorts to longs.
The technical is purportedly there for Bitcoin to trend lower, even after the “fakeout” past $7,000 earlier today.
Popular crypto trader “Mayne” pointed out in the wake of this move that Bitcoin is in the midst of falling out of a bearish textbook pattern, a rising wedge, the same pattern that marked the $10,500 top in February of this year and preceded the spectacular 50% crash.
Bitcoin, currently ranked #1 by market cap, is down 1.72% over the past 24 hours. BTC has a market cap of $123.11B with a 24 hour volume of $38.52B.
Chart by CryptoCompare
Bitcoin is down 1.72% over the past 24 hours.
Get our daily newsletter containing the top blockchain stories and crypto analysis straight to your inbox.
A decentralist at heart, Nick has shown interest in Bitcoin and cryptocurrencies since 2013. He has since joined this industry as a full-time content creator, focusing on written content and visuals. Aside from working with other leading trade publications, Nick is a part-time creative at HTC’s Bitcoin division, EXODUS. He is based in Canada, where there is an apparent lack of industry events.
Commitment to Transparency: The author of this article is invested and/or has an interest in one or more assets discussed in this post. CryptoSlate does not endorse any project or asset that may be mentioned or linked to in this article. Please take that into consideration when evaluating the content within this article.
Disclaimer: Our writers’ opinions are solely their own and do not reflect the opinion of CryptoSlate. None of the information you read on CryptoSlate should be taken as investment advice, nor does CryptoSlate endorse any project that may be mentioned or linked to in this article. Buying and trading cryptocurrencies should be considered a high-risk activity. Please do your own due diligence before taking any action related to content within this article. Finally, CryptoSlate takes no responsibility should you lose money trading cryptocurrencies.
Author: AuthorNick Chong Twitter LinkedIn Analyst @ CryptoSlate
Market cycle: Data shows Bitcoin ready for the bull run after Halving
Since the halving of Bitcoin will take place in just one month, on May 11, 2020, the crypto world has long expected the valuation of the first cryptocurrency to skyrocket. However, the catastrophic sell-off last month questions this theory.
However, historical data suggests that Bitcoin price momentum is currently at the same level as it was before the last halving and before the hyp bubble was inflated.
The cryptocurrency asset class has suffered from brutal downtrends and bear markets for two full years. 90% or more of the value of most cryptocurrencies has been eliminated.
From high to low, bitcoin price fell 84% from its all-time high of $ 20,000 to its current low of $ 3,200.
If you look at the Bitcoin price charts, the driver for the massive bull run seems to be the upcoming halving of the asset.
Each halving reduces the block reward that miners receive for validating the blockchain network by 50%. The theory is that the reduced supply that comes onto the market will eventually reduce the sales pressure on the miners, leading to an imbalance between supply and demand. That should make the rating skyrocket.
After the last two halves, shown as red dotted vertical lines in the price chart above, the Bitcoin price exploded in value and didn't stop until the next big peak was reached. Then the cycle started again.
But the recent sell-off given the impending recession and the dramatic impact of the pandemic on the economy has caused all liquid assets to collapse, including bitcoin, gold, the stock market, and more.
He caused even the strongest supporters of the emerging technology and asset class to believe that the experiment was over and fear that these assets in the delusion of sales and cash demand could soon be put to zero.
However, the recent collapse has actually brought Bitcoin back to more realistic valuations and brought it back perfectly to the dynamics of the previous halving. This signals that the legendary crypto bull run after halving is not out of the realm of the impossible.
If one analyzes the relative price development in the last halving up to the start of the bull run at that time, it agrees with the current price development.
From the bottom of the bubble in 2017-2018 to where Bitcoin is currently traded, a gain of more than 120% has been recorded.
During the same period in the last cycle and just a month before the halving at that time, the price of Bitcoin was also 120% above the low set 18 months earlier.
What happened after Bitcoin and crypto entered the financial world as a financial investment? Bitcoin prices rose from under $ 500 to over $ 5,000 before the public got wind of it. FOMO later raised the fortune to $ 20,000.
Now the Bitcoin price is back at the peak of its financial possibilities. If it goes exactly as it did then, the next peak would temporarily trade over $ 300,000.
As exciting as it may sound, it would be unrealistic that the Bitcoin price will develop as well as in the previous cycles, as each new cycle has generated diminishing returns in the block reward. Regardless, it's still early enough to get started now to take advantage of the next crypto bubble that hasn't even started yet.
Ross Ulbricht Reveals Grim Bitcoin (BTC) Price Prediction, Revises $100,000 Model for Top Cryptocurrency
Ross Ulbricht says Bitcoin’s big 2020 correction is likely to continue.
Ulbricht, the founder of Silk Road, played a controversial role in the adoption of Bitcoin in its early days – long before trading giants like CME launched Bitcoin futures and asset companies like Fidelity began offering BTC trading to institutional investors.
Now serving a double life sentence plus 40 years without the possibility of parole for operating the online darknet market, where customers used Bitcoin to buy a mix of illegal and legal goods and services, Ulbricht has been releasing technical analysis on the cryptocurrency’s trajectory.
In his latest update, Ulbricht says Bitcoin’s drop to $3,850 on March 13th invalidated his previous prediction that BTC appeared to be ready to begin a bull run to $100,000.
His forecast relies on Elliott Wave Theory, a market analysis method that aims to predict future price action by identifying crowd psychology that manifests in waves.
By using Elliot Wave’s A-B-C corrective count, the Silk Road founder says that Bitcoin is now in “wave II” of a long-term correction that could trigger a potential plunge to as low as $1,200.
“The two previous bear markets (of primary degree) reduced prices by 86% and 94%. An equivalent reduction by wave II would take prices to $2,800 or $1,200.”
Ulbricht also offers a timeline as to when the bear market might end and says that the correction may be over as soon as June 2020, but it could last until 2021.
Ross argues that wave II will test the mettle of hardcore Bitcoin investors. Once the corrective wave is over, he believes Bitcoin will begin a new bull market and shatter its all-time high.
“The end of wave II will be accompanied by extreme pessimism and possibly antagonism toward Bitcoin on par with the extreme optimism that accompanied the end of wave I…
It will take fortitude to buy in such an environment, but the rewards as wave III takes prices to new highs will be well worth it.”