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Bitcoin suffered a strong correction from its highest level in 2020 at $12,400 recorded last August, and led to the return of the cryptocurrency to below $ 10,000 for a short period, to bounce back to the level of $ 11,200 for a short-term period at the beginning of this month, then it fell back. Back to $ 10,500 trying to hold out in that range so far.
Although the correction was sharp, the sell-off is very similar to the recent bull market tops, which made sentiment quickly turn to the downside, prompting IQ Option Bitcoin investors to more fear of the downside in the future.
However, analysts say that the latest peak in Bitcoin’s price movement closely resembles the model that took the currency out of its bearish market bottom and sent it to nearly $ 20,000 at the end of 2017, so the cryptocurrency is likely to resume its upward trend.
It’s worth noting that Bitcoin’s low volatility in recent days, along with cautious price growth, is a good sign to buy amid strong market hopes for unreasonable growth and new motives.
The movements of the largest cryptocurrency in the world confirm its dependence on the stock market, as it is witnessing declines side by side with the traditional market and remains under pressure, the motivation behind the stock market decline early in the week is fears of the second wave of the Coronavirus pandemic and its negative repercussions on the economy In addition to the Federal Reserve’s warnings that the economy is not suffering from recession, at the same time Bitcoin began to drop towards $10,000 and then stopped the decline temporarily, to rise slowly.
During last week’s trading, Bitcoin lost more than 5%, despite that, the currency dominance index grew by about 1.5% during the same period, as the liquidation of Altcoins strengthened, causing the Ethereum currency to lose about 14% last week.
Bitcoin is often seen as an investment asset and hedging against inflation which makes it related to gold, this relationship works when investors need to protect their wealth from political or economic interruptions.
Nevertheless, growing political tensions and global uncertainties are pushing Bitcoin to riskier assets and making them fully tied to stocks, and currently, investors have many causes to fear:
Europe is about to restart closures again, with the renewed high number of Coronavirus cases that are recorded daily, and some countries have imposed new restrictions at a time when Britain is considering a complete quarantine again, the United States is also going through severe turmoil before the battle The presidential election campaign between President Trump and candidate Joe Biden, which increases tension and turmoil.
Given the facts mentioned above, the currency may become vulnerable to additional selling, as long as global markets experience high levels of volatility and uncertainty, the main cryptocurrency will decline and begin to recover after things calm down.
Bitcoin may tend to be volatile before the US election and calm down afterwards, usually a time of panic distorting correlation patterns which mean that the similarities between gold and bitcoin, stocks, or any other assets are meaningless.
Professional Trader and Analyst, economist in Financial and Forex market since 2004.holds an MBA from the American University in Egypt. Mohammed works as an economic writer and technical & fundamental analyst for many international Forex and financial trading companies in both English and Arabic on a daily basis.
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