Bitcoin Languishes While US Equities Are Poised To Rebound

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Bitcoin (BTC) Price Could Rebound with U.S. Stock Market: Trader

Interest per week

Interest per year

After its worst day since the infamous Black Monday crash in 1987, the U.S. stock market is set to bounce back big time with the S&P 500 futures spiking four percent. According to trader Satoshi Flipper, this move could be bullish for Bitcoin, given its recent correlation with equities.

Global markets are in a freefall

The Dow index lost 3,000 basic points on Monday despite the Federal Reserve trying to assuage investors by cutting interest rates to zero.

The sell-off intensified during the last trading hour when US President Donald Trump was holding another press conference on the coronavirus. The POTUS mentioned that the US could be on the brink of a recession, which sent all major averages into meltdown mode.

European stocks also closed in the red with U.K.’s FTSE 100 plunging by nearly five percent.

Bitcoin is tied to stocks

While Bitcoin is commonly referred to as ‘digital gold,’ it continues to trade hand in hand with the U.S. stock market. Notably, both Tesla and Bitcoin, which were often compared by analysts in January, are now down roughly 50 percent from their yearly highs.

Anthony Pompliano of Morgan Creek Digital recently noted that Bitcoin was flat during the biggest stock market crash since 1987, but some rightfully pointed out that it had already been priced in because of futures.

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The real question is whether Bitcoin decouples from the equities market after this liquidity squeeze.

Bitcoin’s Crash May Be an Indicator of What’s to Come for the U.S. Stock Market

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The cryptocurrency market was shocked to see blood yet again across the board. In one of the worst days for the cryptocurrency space, Bitcoin BUY NOW is down some 22%, currently trading for $6,100.

The U. stock market is set to open shortly and already futures Futures contracts are literally agreements to buy or sell an asset on a future date and for a fixed price. More are predicting another 5% loss. Things will likely get much worse before they get better.

The entire cryptocurrency market is in deep red — and it may be a sign of what’s to come when the bell rings to open the U.S. stock market.

Coronavirus Fears Rattle Markets

Due to the coronavirus depressing demand and severely impacting everyday life, the markets are in a panic. Many are fearing that this may be the catalyst that tips the world into a major recession.

The picture for today is relatively bleak. U.S. futures for the Dow are currently at –5.22%. World markets are reporting losses across the board: Germany’s DAX is reporting -6.27% today and England’s FTSE 100 has seen -5.65% of its value shed.

Bitcoin is clearly leading the market in losses. However, the rest of the world may just be lagging behind.

On Monday — which has now been dubbed ‘Black Monday’— fears of a 1929-like crash bubbled to the surface. Although there was a slight rebound on Tuesday, those fears are once again now real. The emergency caused the Federal Reserve to pump financial markets with some $186 billion on Tuesday, a number more than the entire market capitalization of Bitcoin.

Is Bitcoin an Indicator of What’s to Come?

Bitcoin is not closely correlated with the stock market, but there is some relationship. This has caused some to speculate whether today’s extreme drop is an indicator that we might see the same in the overall financial market soon enough.

When the opening bell rings on Wall Street, stocks are going to _____________.

— Mati Greenspan (tweets are not trading advice) (@MatiGreenspan) March 12, 2020

At the time of writing, Bitcoin is barely holding onto the $6,000 price point. This drastic drop is nothing short of extraordinary. However, it represents real fears that are now present in the market. Perhaps it is an overreaction—but it is a warning to the rest of the financial world.

With global demand expected to be depressed for the coming months, there seems to be no easy way to end this market rout. We will simply have to wait and see what happens. The outlook, overall, does not look good.

Bitcoin Rebounds as Coronavirus-Infected Stocks Get Jolt From Fed, BOJ

Jerome Powell image via CoinDesk archive

Bradley Keoun

Bitcoin Rebounds as Coronavirus-Infected Stocks Get Jolt From Fed, BOJ

Bitcoin’s (BTC) price jumped the most in two weeks Monday, surging alongside U.S. stocks amid speculation the Federal Reserve and other central banks will support markets as the coronavirus spreads.

The largest cryptocurrency by market value rose 4.1 percent to $8,874 as of 17:53 UTC (12:53 p.m. ET). The move followed last week’s 14 percent sell-off, the harshest in three months.

Despite a belief among some investors that bitcoin should trade as a safe-haven asset akin to gold or U.S. Treasury bonds, the cryptocurrency had tumbled recently along with riskier assets like stocks. The sell-off reversed as global authorities, including the Fed, Bank of Japan, International Monetary Fund and World Bank, pledged to act if needed to help offset any lasting economic damage from widespread travel cancellations, quarantines and factory disruptions.

“Investors are dipping their toes back in the water after last week [when] they jumped out of the pool,” said John Todaro, director of currency research at the crypto-focused firm TradeBlock in New York. “This easy monetary policy across central banks should continue to support markets in general, especially in risk-on areas like equity markets, and that should bleed into other asset classes like digital currencies, including bitcoin.”

Fed Chair Jerome Powell said Friday in a statement the central bank would “use our tools and act as appropriate to support the economy.”

Trading in the Chicago Mercantile Exchange’s market for futures contracts on the Fed’s benchmark interest rate shows that investors now see a 100 percent chance of a 0.5 percentage point cut at the central bank’s next regular monetary-policy decision, scheduled for March 18. The rate is currently set in a range between 1.5 percent and 1.75 percent.

Bank of Japan Governor Haruhiko Kuroda said Monday the central bank would “strive to stabilize markets and offer sufficient liquidity via market operations and asset purchases,” Reuters reported.

The heads of the International Monetary Fund and World Bank said Monday their institutions stood ready to provide “emergency financing, policy advice and technical assistance,” with special attention to “poor countries where health systems are the weakest and people are most vulnerable.”

The global number of infections is approaching 90,000, according to the New York Times. The first two deaths from the outbreak have now occurred in the U.S., with new cases officially reported in New York, Rhode Island and Florida.

Economists with the Organization of Economic Cooperation and Development said Monday in an assessment that the contagion likely will shave 0.5 percentage point off of projected 2020 global growth, from an “already weak” 2.9 percent.

“The adverse impact on confidence, financial markets, the travel sector and disruption to supply chains contributes to the downward revisions,” the organization said.

The rebound in bitcoin left prices up 24 percent so far this year — markedly better than the performance in the S&P 500, which was still down 6.8 percent in 2020.

Some investors say bitcoin should serve as a hedge against economic turmoil, partly because it’s perceived as immune to the cycles that have emerged in traditional markets, where central banks are expected to come to the rescue in the face of a sell-off. The idea is that money-printing will stoke inflation, reducing the purchasing power of government-issued currencies like the U.S. dollar.

The issuance of new bitcoins is dictated by the 11-year-old blockchain network’s original programming, and cryptocurrency speculators have pegged their hopes to the upcoming “halving” expected in May — a once-every-four-years, 50 percent reduction in the pace of new supplies.

Analysts for the German bank BayernLB predicted last year that the halving could send bitcoin’s price to $90,000.

But traders in the nascent market for bitcoin options are split on whether prices will rise above current levels over the next six months. According to Skew, a cryptocurrency-derivatives research firm, pricing in the options market suggests it’s a coin toss whether bitcoin will trade above the $8,000 mark at the end of September.

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The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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