After days of record-level moves, the price of Bitcoin has finally started to calm down; save for two short-term range deviations, Bitcoin has held between $5,000 to $5,500 for the past three days, finding a base as it determines where to go next.
Bitcoin’s relative stability comes at an interesting time in global markets: the VIX, the CBOE’s volatility index that is a measure of the spread on S&P 500 derivatives, has hit Great Recession of 2008 levels as stocks continue to see volatility in response to news regarding the novel coronavirus outbreak and the subsequent government response.
BTC’s ability to hold $5,000 also comes as the Dow Jones saw a historic crash on Monday, falling 13% (or a record 3,000 points) in a single day as the coronavirus rapidly spreads around the U.S. and the world, causing entire economies to go into shut down to prevent further spread.
With this deviation taking place, some analysts have suggested that Bitcoin (and therefore the rest of the cryptocurrency market) is decoupling from equities, proving itself as an “uncorrelated” play on markets.
Bitcoin Won’t Bottom Until Equities Do
Although this decoupling is a promising sign, the consensus amongst leading industry investors is that Bitcoin hasn’t bottomed.
In fact, they say that cryptocurrencies won’t establish a price bottom until the equity market does, as a liquidity crisis will see investors rush for the door with whatever asset they can find, BTC included (and BTC especially).
Prominent crypto analyst Cantering Clark explained this sentiment in a five-part Twitter thread:
“We essentially just went from Bull market to Bear market in under 20 days. The true extent of the knock on effects & damage has yet to even be revealed. We are seeing a fraction of what the reality is.”
Bitcoin has not bottomed because equities have not bottomed.
— Cantering Clark (@CanteringClark) March 14, 2020
He explained that as it stands, some of the world’s “largest and most fundamentally important industries” are being infected, meaning that the stock market and financial system could continue to see continued pressure as time elapses.
As to why this affects Bitcoin, Cantering Clark asserted that there’s no telling which industry companies, including digital asset exchanges, will be affected by the global fallout of a recessionary crisis.
$3,000 Will Be Revisited
With the consensus amongst investors being that Bitcoin hasn’t bottomed, that may conjure another question in the mind of our readers: where will the price of BTC bottom?
According to Chris Burniske, a partner at Placeholder Ventures and the former head of ARK Invest’s cryptocurrency division, somewhere “near $3,000,” where BTC bottomed in the 2018 bear market.
The prominent analyst, who coined the phrase “crypto-assets,” explained in an analysis that for the first time, Bitcoin has decisively broken below its 200-week simple moving average, which he mentioned in 2018 as an occurrence that will mark the start of “real capitulation” that will end in BTC falling to the “really strong support” in the low-$3,000s:
Bitcoin futures were offered around there in size last Thursday, and if there’s more bad news for the world ahead (there is), BTC is unlikely to be spared.
Despite this short-term bearishness, Burniske asserted he remains long-term bullish on “quality crypto-assets”:
Once the world has stabilized, I do expect Bitcoin, Ethereum, and quality crypto-assets to be some of the fastest recovering assets out there, but we’ve got a tunnel to navigate before then.