Bitcoin’s Latest Move Means Market Treating it as a “Risk-on Asset”
In the past two days, bitcoin finally saw some action. After being stuck in a rut for weeks, BTC/USD recorded slight greens to make it to $9,300 on Wednesday, and then yesterday, we moved less than 1% only to drop back below $9,000 to $8,970.
Bitcoin remained boring still.
Okay, you can stop now, it's not funny anymore pic.twitter.com/f2wm0tA06I
— DonAlt (@CryptoDonAlt) July 2, 2020
Although it was minuscule, this action was the first time that Bitcoin traded payrolls like a traditional asset.
“Among economic data releases, US payrolls is one of the two largest sources of price volatility. The market is treating bitcoin as a risk-on asset, not as digital gold,” said trader and economist Alex Kruger.
As we reported, on Thursday, the Labor Department said that the US economy added 4.8 million jobs last month, beating the expectations. As such, the unemployment rate fell to 11.1%, down from a peak of 14.7% in April, but still highest since World War II.
This has the stock market climbing for the fourth day, having the best quarter since 1998. The S&P 500 rallied 20% in 2Q20, the most significant increase since 2011, while the Nasdaq Composite index soared 31%, the most since 1999. Dow Jone meanwhile jumped 18%, having its best quarter in 33 years.
Gold meanwhile is trading near $1,800 an ounce.
Despite the quarterly surge in the market, Congress is considering more relief as coronavirus cases rise and the economy struggles. Now, according to Bloomberg Intelligence’s Gina Martin Adams, what’s ahead is,
“stocks moved into a second phase of recovery in June, where slower and choppier gains are more likely to occur as Fed-driven valuation expansion gives way to economic and earnings progress as the primary driver of returns.”
A “win-win” scenario for investors
Bitcoin is currently ranging and has been for the past two months now, and there is no knowing if the next big move will be to the upside or the downside.
But trader Josh Rager says no matter the direction; it is a “win-win” scenario for investors. He said,
“If it breaks up, price likely ranges over $10k+ for a while – after being held below $10k for so long If price breaks down, it will give more time to accumulate in 4-digit territory.”
Crypto twitter meanwhile is anticipating and expecting a move to the downside.
But if the correction takes us below $8,600 – $8,800, then it will be bad because that would mean, “we’ll likely go high $6k’s or mid $7k’s,” says trader Crypto Michaël.
However, overall, the trend is up since March, and flipping $9,300 would be a bull signal.
As for, can we crash after making above $10,000, of course, BTC can, but Rager feels this is unlikely to happen. “Another clear break & close above $10k & it's likely buyers pile in to sustain the price,” he said.
“Anything is possible with an illiquid + volatile asset such as Bitcoin It could range under $10k for many more months,” warns the trader, but at the same time, he wouldn’t bet against bitcoin long term.