Market Insights

This post is a translation of the weekly cryptocurrency analysis by Block Insight, a wholly owned subsidiary of Monex Group (Tokyo, Japan). Monex is the parent of TradeStation Group.

Summary

• Bitcoin (BTC) crashed 30% on the week
• BTC’s drop came as Coronavirus fears caused an emergency declaration from the U.S government and a pandemic declaration by the World Health Organization (WHO).
• Both cryptocurrency and equity markets entered a bear market as evidence of buyers were few and far between.

Bitcoin (BTC) fell sharply this week following emergency declarations by several global agencies and governments. The fall occurred in tandem with the stock market, giving credence to the argument that cryptocurrencies are speculative assets rather than safe-haven assets.

Expectations were high that U.S President Donald Trump would announce a stimulus package to dampen the effects of the Coronavirus on the U.S economy in an address to the nation on Wednesday night. Though Trump announced plans to help workers impacted by the virus, markets saw the proposals as too vague, and the selling intensified.

This Week’s Topics

• Report by the Economic Times claims that the Reserve Bank of India (Central Bank of India), which tried to cut off cryptocurrency companies from the Indian financial system but lost, will return to the Supreme Court again to resist the ruling. (3/9)
• Bitcoin (BTC) and altcoins such as Ethereum (ETH), Litecoin (LTC), and Dash (DASH), fell sharply, signaling that cryptocurrency is not a haven in times of market disruption. (3/10)
• BTC undercut major resistance at $6,400, which dates back to November of 2019. (3/10)
• Thursday, the NY Fed announced plans to pump $50 billion more into financial markets.

The Dow Jones Industrial Average fell 20% in the last month, as it met the definition of a bear market (20% off highs) for the first time since the 2008 financial crisis. 2008 coincided with the year that Bitcoin’s (BTC) whitepaper was published by Satoshi Nakamoto. At that time, BTC was not trading. BTC has now entered unknown territory. BTC has never been trading during a market environment like the current one. The unknowns still surrounding the Coronavirus brings more uncertainty into the equation. Cryptocurrency investors will be watching equities markets closely as crypto and global markets seem to be trading in lockstep now.

Both equities and cryptocurrencies saw some short term relief in the form of an announcement by the New York Federal Reserve. Thursday afternoon, the NY Fed announced that overnight cash injections would increase by some $50 billion overnight. The stimulus was enough to push BTC back over $6,000.

Market participants will be watching to see whether BTC can recapture old support from late 2019. The $6,400 level on BTC is now resistance and the recent low of $5,500 is support.

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