The sudden collapse of the price of Bitcoin and other cryptocurrencies in March amid the Covid-19 pandemic was timed alongside a disastrous day for the traditional markets, notably the S&P 500. This correlation was unexpected as people expected Bitcoin to be a hedge, but it proved to be closely aligned with institutional investors.
However, since that collapse, Bitcoin has shown its traditional volatile ways in bouncing back over 90 percent briefly and settling at a much better level than its $3,800 low. The coin has been hovering around the mid-$6,000 mark dipping and rising with the latest rise taking it as high as $6,500 for a time.
This latest move into green numbers from Bitcoin is, however, once again timed with a rise in the traditional markets. The coin rallied as much as12 percent at its high point while the S&P 500 rallied 3.35% while the Dow and Nasdaq gained 3.19% and 3.62% respectively.
However, it does not necessarily mean that these two are acting in a correlated fashion once again as Bitcoin has shown to kick into gear with the impact on the US economy feeling fresh waves of pressure from Federal Policies. The stock market too might be reacting to economic pressure.
Next steps for Bitcoin
Bitcoin having made it above $6,200 is a good sign for the coin as Michaël van de Poppe suggested that once above $6,200 the price could quickly rise to $6,600 and traders will note that today the price has moved through the volume gap from $6,250-$6,590 on the VPVR indicator.
This leaves the coin in a precarious position as both “bull/bear scenarios pivot around the $6,600 area.” he further explained that:
”The moment that the $6,600 area is rejected and the CME gap is closed, further downward pressure is expected to occur.”
While the Covid-19 pandemic has had its effects on the stock markets — and is likely to continue to do so — as well as the Bitcoin market, it has moved headlong into directly affecting the global economy.
In the US, for example, the virus has sadly claimed 3,000 lives and also forced retail half a million workers into furlough as things grind to a halt. This could well be the reason behind the response from both Bitcoin and the stock markets as they look to react positively to the gloomy news coming from the economy.