After tumbling down to below $6,500 yet again, Bitcoin went back above $7,000 in a strong move. With these gains, BTC continues to follow stock markets which shed yesterday’s losses and jumped today.
These gains came despite the new jobless claims topping at five million for the week ended April 11. This resulted in bringing the total unemployment claims tally to over 22 million.
However, economist and trader Alex Kruger said, “Let’s not forget people lost their jobs because governments ordered businesses to close. This is temporary. Most jobs will be back and fast.”
According to JPMorgan strategist, the market hasn’t fully factored in the uncertainties or potential risks of earnings downgrades yet.
Meanwhile, President Donald Trump is expected to announce the guidelines to relax stay-at-home rules after the US has “passed the peak” on new coronavirus cases.
Globally, COVID-19 has affected 2.13 million people globally, with fatalities reaching 142,716.
“We don’t know what the economy is going to look like over the next year — there is a lot of uncertainty with the virus,” said Mark Kiesel, global credit chief investment officer at Pacific Investment Management. “We are not through the woods yet — there could be a second wave.”
Bitcoin might have jumped above $7,000 for now but it is a strong resistance level. However, trader Crypto Michael says, “The $7,600-8,000 area isn’t tested yet and we could still have a slight rally pre-halving.”
The world’s leading digital asset has been moving in tandem with the stock market since the coronavirus spread out of its epicenter in Wuhan, China and triggered massive sell-off.
“If financial markets are at a key inflection point and the overall risk-on trade has run out of steam, cryptocurrencies could be the first major asset class that gets sold,” said Ed Moya, a market analyst at Oanda Corp. “Bitcoin could be very vulnerable here as investors become nervous that the snapback rebound is about to get faded.”
This rise in BTC price however came at a time when retail interest in bitcoin is increasing. As we know, crypto exchanges from Coinbase, Kraken, Paxful, Bitfinex to Luno, Binance, and OKE have all recorded an influx of new users.
Furthermore, new user activity on the Bitcoin network is also accelerating. The growth of new entities has tripled over the past month, jumping from 6000 to over 17,000 new entities per day.
Despite the retail interest, investors are moving their Bitcoin out of exchanges, which Glassnode said, implies their “long-term holding intent.”
With investors doubling down on HODLing before halving, Bitcoin’s Net Unrealized Profit/Loss (NUPL) is approaching the “optimism” zone.
“A breakout into this zone usually signifies increased investor confidence and leads to further price gains.”
A similar pattern was seen in April 2019 and if the trend repeats itself, Bitcoin could overcome the $7,000 mark and further jump higher.