We continue to see curve balls in traditional and crypto markets. From an uneventful presidential debate to a COVID case, we can’t seem to anticipate what comes next. After Trump’s announcement of him having the virus at 12:54 am on October 2nd, global markets started a massive sell-off that the U.S. markets had to puck up. U.S. markets were unsuccessful in closing with a positive day. Let’s go over how Bitcoin was affected, and it’s a crucial point to maintain.
News about Trump’s case and BitMEX’s incident sent bitcoin off in a sudden dip. Long-story-short, the CTO of BitMEX was arrested for violating the Bank Secrecy Act. The U.S Commodity Futures Trading Commission and Department of Justice are also seeking the CEO. They have been accused of violating money-laundering acts and knowingly servicing U.S. citizens, something they were forbidden to do.
After the sell-off, Bitcoin saw consolidation at $10.5k. This is the new support level to maintain if it hoped to stay away from the $9.6k CME price target.
The one-hour Bitcoin price chart. Source: TradingView.com
Breaking $10.5k will determine if further movement downwards is in store or if we can begin to recover, starting with an $11.1k-$11.3k resistance range. Analysts are more concerned with equity markets than with BitMEX’s incident. They see it as a non-event in the long-term, considering the fact that the centralized exchange is known for its sketchy practices.
What can save bitcoin? Well, the stimulus package that continues to be delayed but will inevitably come will pump both traditional and crypto markets for some time. Another important thing to consider is the strong support around $10,380 price level. Many institutional investors are buying bitcoin at these levels and provide a nice cushion for bitcoin to fall.
One surprising change in dynamics is bitcoin’s relationship with gold. During this time period, we saw a stronger correlation with equity markets as opposed to gold. The chart below points out the realized correlation between the two assets, and it’s clear that in the long-term, we have not build a strong fundamental relationship between them.
Realized correlation between Bitcoin and gold. Source: Skew
That being said, bitcoin has a stronger correlation with equity markets in the short-term, so I’ll continue to look at that to determine where it will move to next.