- Fed surprised by “over-delivering before schedule”
- Investors “selling whatever they can” as spreading coronavirus spurs panic across markets
- “There is nothing which can be classified as a safe haven — not even gold.”
Bitcoin is back in the green, trading around $5,400, up 10% in the past 24 hours. Altcoins are trailing behind recording gains of as much as 14%, recovering $20 billion. The price of the Bitcoin has lost 48% of its value since last month's high in accordance with the stock markets.
We headed into this week with global lockdown and the fear of recession which the Federal Reserve tried to better by cutting rates to zero percent and announcing a $700 billion QE.
While bitcoin maintained its position above $5,000, the stock market fell hard, triggering circuit breaks almost every day now as the Fed surprised by “over-delivering before schedule.” Major central banks also announce coordinated action to enhance liquidity via swap lines.
“This is all extremely bullish and should help markets pop hard. All markets,” said economist and trader Alex Kruger.
The assets will rally hard only to fade on lower volatility. Kruger expected lower lows in the equities down the line because
“the real economy will visit purgatory, and a multi-months bottoming process followed by a strong reversal. Vol should fall. All markets include crypto. Also very bullish for gold.”
There’s nothing which can be classified as safe haven
The market faded on one of the most bullish Fed actions sending stocks down. The dollar was also crushed. The US equities plunging is a sign that investors have lost confidence in easing policy as a way to combat the economic effects of the spread of coronavirus.
Bitcoin’s outlook is “bleak” as it continues to trade in line with risk assets, “almost tick for tick. The S&P 500 is the market guide.”
Correlation between crypto market and equity market:
Crypto get dumped before equity – no circuit breaker plus 24/7 trading
Crypto de-leverage happens much faster – bottom reached after about 50% drop in 10 days and now recovering
Is -50% S&P headed before thing get better?
— Melody He (@melmelmelting) March 17, 2020
The precious metal has been extending its losses today after its worst week in about four decades with investors “selling whatever they can” as the economic impact of coronavirus spurs panic across markets.
Gold “is being sold to generate liquidity and to offset losses in other markets,” Zumpfe of Heraeus said.
“In some cases, investors also sell their gold holdings in order to keep the value of the precious metal constant in their overall portfolio. Due to the lower value of the equity share, gold would otherwise take up a larger share in terms of value.”
According to Naeem Aslam, chief market analyst at Ava Trade, “The traditional rules are out of order and there is nothing which can be classified as safe haven — not even gold.”
However, Kruger says those which are affected by the dollar liquidity will perform best. This means gold “should start acting again like a safe haven.”
Unlike the traditional market, the crypto world doesn’t have any bailouts by the government. There would be no QE, president pump, pointed out Xinxi Wang, the co-founder of the Litecoin Foundation.
“It's just you and the market, the cold and brutal but full of hope market. To survive in such a market, make sure you are disciplined. Set rules for yourself. 1. Don't risk what you cannot afford. 2. Best not to use leverage. 3. Make sure you can bear the leverage,” advised Wang.