After another tumultuous day for the world’s most powerful cryptocurrency, we end the day with Bitcoin still struggling to find footing in the market. There has been an overall downturn in virtually every asset market worldwide due to shutdowns and fear of the coronavirus pandemic which has turned the world economic narrative on its head. And, contrary to what many have believed, Bitcoin has not yet been able to rise above the pack despite its reputation for being both decentralized and a safe haven. Bitcoin is now trading at just above the $5000 mark even after unprecedented moves by the Fed to pump new money into the market.
Today, Bitcoin made a run for levels above $5500 but that move was a short run. By 1 pm, Bitcoin was at $5000 and is now trying to push its way back up to the day’s high. At the time of press, Bitcoin was trading at $5363.
One of the primary reasons for Bitcoin still struggling to find footing is that people are scared. With markets in near-complete free fall with no clear end in sight, many investors are beginning to wonder whether Bitcoin is strong enough to put up with this much market volatility. Traditionally, Bitcoin has been on the outside of assets and fiat currencies and avoided direct influence of market movements for the most part. Now, however, with greater levels of acceptance for the popular cryptocurrency as well as a more diverse group of Bitcoin holders, that outsider effect may be a thing of the past. While it is still too early to tell, many investors are wondering if it’s worth the risk.
With the Fed cutting rates and a new bill being passed into law today to try and prop up the US economy, there would be good reason to think that some degree of investor confidence would begin showing up on the world trading markets. That has not yet been the case, though, and many are in a holding pattern until more clarity presents itself.
The Fed did more than simply cut rates. In addition to the rate cut of 100 basis points, measures also went into play that would see upwards of $700 billion in market support. And, to curb feelings of hopelessness and panic in the American public, the US Administration is planning to send out checks to ‘every American’.
What is considered a stimulus on Wall Street is considered a handout on Main Street.https://t.co/saqGzdDsqs— Ibram X. Kendi (@DrIbram) March 12, 2020
Today, even after all the stimulus injected into markets helped ease the situation a bit, the S&P 500 fell as far as is possible for a day’s losses. Of course, we will have to wait to see what tomorrow will bring, but investor fear seems to be winning out at the moment. The problem for Bitcoin at the moment is that it has yet to be adopted by the mainstream as a replacement for the same kind of value held in the stocks, bonds, and other commodities.
Another issue is the fact that although some money is being pumped into the markets, the world is still on lockdown due to the pandemic and there just isn’t much commerce taking place to support the markets at the core.
The problems are stemming from societies around the world reacting to an unprecedented global health event and there just isn’t much anyone government can do to curb the issues at hand, even if that government is the one that can print money whenever they feel like it. So, until the coronavirus issues begin to subside and people can see what lies beyond, it is likely that financial markets are going to continue with their current struggle.
Bitcoin, of course, must be included in that but it may have a few tricks up its sleeve that traditional markets do not thanks to the decentralized nature of the coin. If investors begin to look towards Bitcoin as a safe haven once again, all it would take are a few strong rallies to get things back on track.
That said, this isn’t the first time Bitcoin has tanked in response to emotional trading and it certainly won’t be the last. The thing to remember about Bitcoin is that its recent turmoil has been the result of a large number of factors that worked together in symphony to drive down prices. The truth is, we don’t really know how much those factors reduced the value of Bitcoin in comparison to how the stock markets did. Both had an effect, but neither case may have had enough behind it to drive prices for BTC down as much as what we have seen in recent weeks.
Still, a safe haven Bitcoin does not appear to be - at least not yet. It is perfectly feasible to imagine a comeback for the popular coin which could see prices far exceeding the upper limits of last month, but there’s no telling when that will happen. The current idea is that once the pandemic has begun to wind down, investors will enact whatever plans they have. Until that happens, it is very likely that cash will be the world’s favourite safe haven until the fear and uncertainty surrounding communities around the world has subsided.
Cash, after all, will get people through the global lockdown when it comes to purchasing items needed for basic needs and food. That said, Bitcoin and other cryptocurrencies are likely to be among the best options for spending online as there is still plenty of liquidity there. Should things get to the point where most physical stores close and the majority of the world’s shopping is being carried out online, there is a good possibility that crypto could take the opportunity to shine.
On a positive note, a quick look at the daily charts indicates an interesting situation for Bitcoin that could very well signal a moderate climb over the next day. The 14-day RSI and MACD are both indicating a possible turn around for BTC - if that materializes, a run to $6000 would be within grasp.
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