Bitcoin fell 13 percent last week as the S&P 500 registered its biggest weekly decline since 2008
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The S&P 500, an index of large U.S. stocks, fell by 11 percent last week to register its biggest weekly drop since the financial crisis of 2008.
Equity markets cratered as the coronavirus spread outside China at a faster rate, triggering fears of global recession.
Interestingly, bitcoin, the top cryptocurrency by market value, also fell by 13 percent last week, confounding a few analysts, who were expecting the cryptocurrency to benefit from risk aversion. Bitcoin had rallied by 30 percent in January amid the U.S. Iran tensions and the beginnings of the coronavirus outbreak in China.
Billionaire investor and Galaxy Digital founder Micheal Novogratz thinks bitcoin served as a source of liquidity to fund margin calls triggered by the stock market crash.
A margin call occurs when the value of the investor’s leverage account drops below the minimum margin requirement. The investor is then required to bring in additional capital or securities to build back the account up to the minimum margin requirement.
Gold also fell by 4 percent – also the biggest weekly loss since November – reportedly due to margin calls.
While bitcoin underperformed last week, it is still posting bigger gains on a year-to-date basis than the S&P 500 and gold. The cryptocurrency is still up 20 percent on a YTD basis, while the S&P 500 is down 9 percent and gold is reporting a 4 percent rise. |
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Seller Exhaustion
BTC: Price: $8,770 | Market cap: $160 billion | 24-Hr Volume: $40.76 billion
Trend: Bearish Bitcoin produced a doji candle on Sunday, signaling seller exhaustion in the market and aborting the immediate bearish view. So far, the follow through has been positive.
At press time, the cryptocurrency is trading near $8,770, representing over 2 percent gains on the day. However, a bullish doji reversal pattern would be confirmed if prices print a UTC close above the Sunday's high of $8,750 on Monday.
That could invite chart-driven buying, yielding a test of the former support-turned-hurdle of the head-and-shoulders neckline at $9,500.
However, if the buyers struggle to keep prices above $8,750, a fresh move lower to $8,400 could be seen. A violation there would expose the next support lined up near $8,20 (Jan. 24 low).
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| | | | Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments. |
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