BTC to Follow Stocks to the Downside, Analyst says Post Halving Sell-Off Makes Sense
Last week, bitcoin went as high as nearly $9,500 only to drop back down to $9k level. Much like February, we weren’t able to sustain above $9,000 and went to $8,500.
At the time of writing, BTC/USD has been trading around $8,750, down 2.12% but still managing $1.58 billion in trading volume.
Bitcoin’s price withdrew just as the global stock markets slumped with investors braced for trade conflict between the US and China over the origin of coronavirus. Secretary of State Mike Pompeo said there is “enormous evidence” that the virus came from a Wuhan laboratory.
Geographical Tensions are Back
Just four months ago, the two biggest economies signed a trade agreement. Over the past two years, Trump imposed duties on roughly $360 billion on Chinese goods and China retaliated by hitting over half of America's exports.
But this weekend, Trump raised concerns calling tariffs “the ultimate punishment” for China's response to the pandemic. The death toll from Covid-19 is currently nearing 68,000 in the US with 30 million Americans now unemployed.
“The trade war was launched in good economic times, when additional tariffs could be absorbed,” said Scott Kennedy, a China expert at the Center for Strategic and International Studies.
“Reimposing or expanding tariffs right now, in the midst of a global pandemic and U.S. unemployment at over 20%, would be far harder to justify economically or defend politically.”
The political pressure to take some action against China is mounting on Trump. Also, a record-high number of Americans now have a negative view of China.
Meanwhile, factory data is painting a grim picture of the April output but US states have started moving towards re-starting regional economies.
Wall Street futures currently suggest a weaker open ahead with the US dollar booking solid gains. Gold also rose 0.2% to $1,701.
Bitcoin while following stocks is currently in the red. But trader Credible Crypto is expecting one more sweep of the lows at $8,400 calling the $7,800 to $8,200 range an “obvious long.”
After last week’s rally, the leading digital asset has made a superb recovery and is still at pre-March crash levels. But now it is approaching “major supply zone,” said analyst Filb Filb.
“Could see a climatic Fomo halving attempt across $10k which may prove too much for the bulls to close on the monthly and more time in the range 9.2 – 6.5 could be needed,” he said.
Everyone is pretty excited now that bitcoin pumped with decent momentum and halving is coming…
Perfect time to range for the entire week imo.
— Livercoin (@livercoin) May 4, 2020
After a 100% gain off the bottom, a post halving sell-off “kinda makes sense” as other analysts have also been calling out a further capitulation after the halving next week.
Though it would be frustrating for bulls, it would help provide a solid base for a potentially higher low. This would also “position the market superb for a bull market end 2020 and into 2021.”