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The US stock market created the worst opening performance, trading stopped within seconds of the opening and the index fell 12%. This is not only the worst start ever, but it will also have a devastating blow to indexes around the world. So far, global stock markets have fallen 30% -40%.
In addition, the safe-haven asset gold plunged today, down 7%. Silver tumbled 22%, while Bitcoin (BTC) fell 15%, but quickly recovered to $ 5,000. Does this mean that there is a positive correlation between the stock market and cryptocurrency trading?
Bitcoin closed below 200-week moving average
Last week’s weekly K-line closed below the key 200-week moving average (moving average), which is clearly a support for the bull market cycle. What traders want to know now is whether the bear market will start like this?
In short, yes. As long as Bitcoin’s price cannot break above 200MA on the weekly line, upward momentum seems to have been falling. Nonetheless, it is still possible for us to see price bottoming out and surpassing the 200-week moving average in the coming months.
This is similar to the golden fork that the market has seen in the past few months. In the end, because of the sharp fall in prices, the golden fork also failed.
Bitcoin rebounds after U.S. market opens
Since the U.S. stock market opened today, the price of Bitcoin has risen 12%. Does this mean that the positive correlation is over? Not really. The downward force appears to have been reflected in Bitcoin over the weekend, but the US market continued this effect after the opening.
Is it different this time?
Such a move does not mean that relevance has disappeared. Gold and silver also fell sharply after the opening, suggesting that investors are still selling their risky assets to protect their investment portfolios.
Global stock markets have fallen by about 30% -40%. If we compare it with the previous stock market crash, we may see that the first wave of declines has a range of 35-50%. Bitcoin dropped 41% in January 2018 (after a high of $ 19,600), and has since rebounded, and we can consider it a temptation. Similarly, the Nasdaq fell about 41% in the first wave of the 2000 crash, and the Dow Jones Index fell about 40% in 1929.
Although we are seeing a sharp drop, the short-term rally is also coming.
“It’s different this time” is an irony of the securities industry, and coronavirus is indeed different from the Internet bubble period. But because of human psychology, markets tend to be the same.
In view of this, over time, the pricing of strict measures for the transmission of coronavirus will surely be reflected in the market faster.
Most people in the Western world are isolated and will soon be quiet. On the other hand, governments have announced substantial measures to help the economy.
The rally still needs more factors
It seems logical to assume that Bitcoin will bounce strongly from here. Emotions are at their lowest point, the crypto fear and greed index has dropped to 8 (out of 100), showing extreme panic. Similar figures also appeared when the last time bottomed at $ 3,100 and plummeted to $ 6,000 after February 2018.
The 4-hour chart shows a bullish divergence, a reliable indicator of a potential short-term trend reversal. Resistance above the current price level is at $ 5,200 and then between $ 5,600-5,800.
A bullish divergence occurs when prices fall just below the recent lows to occupy the “liquidity” there. Many traders place their stop loss below the lowest point. Such a pattern usually occurs before the price moves in the opposite direction. Within 4 hours, similar departures can often be seen.
Considering that investor sentiment is in the final downturn, the underlying rebound is already in place.
However, some basic factors are needed to restore the upward momentum.
The first key factor is maintaining support in the green zone ($ 4,800). If this level remains supported, the market will have further upward momentum.
After that, you need to break through the $ 5,200 price and keep it moving towards $ 5,600. Only if the price of $ 5,200 is maintained can the upward momentum continue.
After that, maintain liquidity and push the price above $ 5,600-5,800, so that the rebound can be confirmed.
Bitcoin bearish assumptions
What about the bearish situation? this is very simple. Once the price of Bitcoin has lost the $ 4,800 level, you can see strong downward momentum here. Several important positions below: 4,150-4,200 and 3,750.
However, the market is currently showing some slight strength as it makes slightly higher lows and bullish divergences over a 4-hour period, and the CME gap is near $ 5,900-6,000. All factors have a brief rise in kinetic energy.
Source: Coin World & Coin World App
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