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) prices stabilized and rose more than 30%
• BTC prices began to diverge from equities markets

Market Trends This Week

Bitcoin (BTC) continued to trade in a volatile manner this week, mirroring the wild price action from recent weeks. Following ratcheted up fears around the world attributed to the Corona Virus, the price of BTC spiked lower by more than 40 percent last week, giving up significant support ($6,500 area) dating back to November of 2019. BTC was not the only asset to drop last week due to pandemic fears- equities, gold, and oil all suffered substantial losses.

This week, BTC was able to find dip buyers and attempted to regain a major support level. Economic stimulus provided by the Federal Reserve and a globally coordinated effort by central banks to support markets helped assets such as equities and BTC stabilize. BTC, which has seemingly been trading in lockstep with U.S equities recently, saw a change of character this week. BTC prices saw a bullish divergence and were able to get support well before the stock market.

To show more evidence of a potential bottom, it will be critical for bulls to hold support from November which lies at $6,500.

This Week’s Topics

• On March 12, Bitcoin (BTC) saw a drop of 27 percent, the largest one day drop since December 2013. (3/13)
• The U.K’s financial regulator, the Financial Conduct Authority (FCA), warned investors to be careful about potential cryptocurrency scams related to the Corona Virus. (3/14)
• Russia will bid to find ways to block censorship-resistant internet technologies such as the yet to be launched blockchain-based messaging app offered by Telegram. (3/14)
• New York’s Department of Financial Services (NYDFS) is requiring state-approved cryptocurrencies to submit a detailed Corona Virus response plan which covers items such as cyber risk mitigation measures and employee protection strategies. (3/15)
• Cryptocurrency exchange operator Binance plans to enter South Africa. (3/16)
• Toyota Motor (TM) will create a coalition that uses blockchain in the auto industry to improve reliability based on used car repair history. (3/17)

Next Week’s Market Forecast

Cryptocurrency investors will be focused on two factors going into next week: economic stimulus and developments in the fight against the Corona Virus. Both equities and cryptocurrencies markets stand to benefit if world leaders continue to increase the number of economic stimulus measures around the world. On the other hand, markets will still likely be driven by headlines surrounding the progress made in fighting the virus.

Cryptocurrencies have suffered short term pain due to the “black swan” event of the pandemic, however; they may stand to benefit as time passes. One possible way Bitcoin (BTC) may benefit from a situation like a global pandemic is the lack of a management entity. Stocks, crude, oil, gold, and other assets all depend on corporate performance in one way or another while BTC does not. Cryptocurrency investors will be keeping a keen eye on the solvency of exchanges and mining companies as well. Bankruptcies in any of these companies would raise a red flag, though it is unlikely considering the rise of strong players in the industry like Binance, Coinbase, and Bitmain in recent years.

As of the time of this writing, BTC is right near resistance at $6,500. Support lies at the recent lows of $3,800. $3,800 is a critical level as it coincides with support going back to February of 2019, as well as the recent low which was made on a massive turnover in trading volume.

Note: Equities and Futures accounts are offered by TradeStation Securities, Inc. Crypto accounts are offered by TradeStation Crypto, Inc.

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