Bitcoin Could Drop Even Lower to $6,400 – Don’t Be Surprised
- Crypto not “fully connected” to the financial markets, “otherwise it would have been decimated,” – economist and trader Alex Kruger
- Low correlation to traditional assets makes it valuable to the asset allocator, Gabor Gurbacs digital asset strategist at VanEck.
In yet another red start of the week, bitcoin is trading just above $7,900 while volume on top ten exchanges with real volume has reached over $2 billion after weeks of weak volume.
Yesterday, we dropped to $7,684 while on Saturday, we were trading at $9,200. Hodlonaut said,
We are entering a period of extreme turmoil and fear in global markets.
Bitcoin will be here, producing blocks every 10 minutes.
When the dust settles, Bitcoin will have proven itself in a whole new way.
— hodlonaut🌮⚡🔑 (@hodlonaut) March 9, 2020
As we reported, there have been several bearish narratives fueling this downtrend. First, the deadly coronavirus (covid-19) still has its hold on the market as new cases keep on getting added to the infected people tally that has gone above 100,000. The virus has been affecting the global markets along with crypto for the past three weeks.
Besides coronavirus, miners played a part along with the PlusToken ponzi scam which moved 13,000 BTC. However, they haven’t entered the market for selling yet.
I see the Plus Token ghost being floated around again. That's a narrative for the weak, the dumb and the fearful. Whales will always move the market. Makes no difference if the one dumping on you is Plus Token or Mister Chang.
— Alex (@classicmacro) March 9, 2020
Another Event Hits the Markets
Over the weekend, another bearish narrative has been added to this list, oil price war. Oil prices suffered a historic collapse overnight after Saudi Arabia launched a price war against Russia, which was once its ally.
Crude has been down 27% and Brent Crude tumbled 26% on their worst day since 1991 as traders brace for Saudi Arabia to flood the market with crude in a bid to recapture the market share.
The turmoil came after OPEC and Russia couldn’t come to an agreement, which made an alliance at the start of 2017 to restrict oil supply to support prices. But Russia refused to go along with OPE’s proposal to prop up the coronavirus-battered oil market by cutting the production.
Over the weekend, Saudi Arabia slashed the prices further and is expected to add to the supply in a bid to put pressure on Russia.
Bitcoin not “fully connected” to the financial markets
As a result, the broad markets crashed and so did Bitcoin. Crypto Squeeze says,
Brutal daily candle for BTC.
And BTC was leading the dump on the traditional markets before it opened.
Bloody monday indeed.
Anyway, 7.6k-7.8k is the next level of interest to buy.
Go easy on the leverage, knife catching with high leverage is suicidal.
Stay safe pic.twitter.com/hySnVMmBGB
— Squeeze (@cryptoSqueeze) March 9, 2020
Bitcoin -10% feels mild given S&P futures limit down
84% of US stocks are owned by the 10% richest households, a majority of which are Boomers with no allocation to bitcoin
Millennials who own bitcoin also have a small allocation to stocks
➡️Less liquidations & margin calls pic.twitter.com/VaSAd3bpe9
— skew (@skewdotcom) March 9, 2020
However, the bigger perpetrator has been the liquidations on crypto exchanges. In one of the biggest liquidation, 21,992,685 contracts were sold at $7,845 on BitMEX.
Finex has been unloading like a gatling gun today.
— Hsaka (@HsakaTrades) March 8, 2020
This is not retail traders selling Bitcoin because of a global market crash. It’s whales playing their usual games, taking us all along for a ride. https://t.co/HpeX8bDGJ6
— The Wolf Of All Streets (@scottmelker) March 8, 2020
Unlike the kill switch triggered by the excessive sell-off in the traditional market that stops trading when markets crash too hard, crypto exchanges REKT traders.
This means, nothing stopping bitcoin from falling further. For now, “7700-6800-6400 are the major levels,” according to Kruger.
Crypto investors should thank crypto is not fully connected to financial markets. Otherwise it would have been decimated. But panic creeps around. $BTC at 6400 soon should not surprise anyone. These are uncharted waters. When moves of this magnitude occur, everything is possible.
— Alex (@classicmacro) March 9, 2020
The fact that the young market of bitcoin has a low correlation to traditional assets also makes it valuable to the asset allocator.
Meanwhile, trader Tone Vays who has been bearish on Bitcoin most of the time than not further reflected on his 2020 outlook where he sees the digital asset falling to sub $6k and $5k before the halving if we tumble below $6,500.