- The market in consolidation is a “great sign” and the type of price action that tends to lead to a bullish flag
- Bitcoin remains completely uncorrelated makes Bitcoin “a great hedging tool”
Yesterday, Bitcoin went to $9,575 level only to go down to $9,075 level. In the past 24 hours, Bitcoin has dropped 2.24% but is still maintaining above $9,000, a level the digital asset broke above last week. Mati Greenspan, founder of Quantum Economics in his Tuesday newsletter said,
“As we continue to consolidate, it seems that a touch of gravity has set in. So far the red numbers have been extremely mild, which is a great sign as this is exactly the type of price action that tends to lead to a bullish flag.”
From the technical point of view, he said we would be looking to test the 200 DMA as support which means “a kiss of that blue line without breaking below would likely signal a blast off pattern en route to the moon.”
Analyst The Cryptomist feels the “drop could almost be complete,” as we approach the support test of the wedge in addition to the possibility of a “falling wedge within wedge present.”
A Great Hedging Tool
While Bitcoin has been holding stable, after the US it’s China’s turn now. The US stock market is now recovering from the deep selloff from last week. Meanwhile, the Chinese market opened on a deep red after being closed because of the Spring Festival which was then further extended due to the coronavirus outbreak.
The People’s Bank of China is now doing its best to stymie this selloff and inject billions of dollars in the market to prop up the prices of China’s stocks which are looking “downright ugly.” But for now, it isn’t having much effect on the price.
However, the fact that Bitcoin isn’t affected by whatever is happening in stocks is good for the crypto market. Greenspan said,
“Crypto is neither acting like a safe haven in the face of the virus, nor is it selling off with the other risk assets. Rather, it remains completely uncorrelated.”
And from a portfolio manager’s perspective, “the fact that it is less exposed to whatever's happening in the news and is largely unaffected by external factors,” is what makes Bitcoin “a great hedging tool.”