The bottom seems to have fallen out of the Bitcoin market overnight. Now many analysts across the board are suggesting that the cryptocurrency’s plummet has more to do with general stock market woes than anything else.
The “stock market,” by any measure, is not doing well today: the DJIA has dropped a couple of hundred points since mid-week, slumping to multi-week lows, and there’s more to suggest that the other shoe (or a raft of other unused shoes?) may drop sooner than later. That’s what’s pushing traders like those at Warren Buffet’s Berkshire Hathaway to pull their equities and hide the money under a mattress (figuratively speaking) or diversify into gold or Bitcoin.
Now, though, Bitcoin has sunk below $11,000 for the first time in weeks, and some suggest it’s not likely to rebound quickly.
“This time … a quick V-shaped recovery back to recent highs around $12,000 looks unlikely due to cryptocurrency’s increased sensitivity to traditional markets,” writes Omkar Godbole at Coindesk.
Godbole also quotes Matthew Dibb, co-founder, and COO of Stack, who clarifies the reality by saying that “macro factors are currently at play, and Bitcoin shows a higher correlation to global equities markets in this ‘risk-off’ period.”
In other words, even though BTC may be a “safe haven” for equities money, traders see even safer havens, and associate BTC to some degree with general markets. That’s what pushed Bitcoin down today, according to various sources of market wisdom.
At Cointelegraph, William Suberg mentions “weakness across macro indices.”
“Comparing Thursday’s losses even to recent drawdowns from local highs, Bitcoin has fared less badly in context than price indices would suggest,” Suberg writes. “A knock-effect of the losses was nonetheless a dramatic shift in investor sentiment, according to the Crypto Fear & Greed Index. The Index, just days ago firmly in its ‘greed’ zone, fell by more than 30 points out of 100 on Friday to stand at 40 or ‘fear’ for the first time since July.”
Keep doing active research on markets – and when you see troubling signs, don’t wait to batten down the hatches.
