In yet another bad day, the crypto streets ran red as cryptocurrency prices crashed.
Bitcoin continued falling, going as low as $8,627 level at one point on Bitstamp. At the time of writing, BTC/USD has been trading on $8,740 down 5% in the past 24 hours.
While earlier this week, we were struggling to remain above $10,000, today, Bitcoin price breached $9,000 level in a market-wide sell-off that wiped out over $35 billion in these past three days.
Going forward, “heavier bids at 8.8k. I can stay solvent longer than the market can remain bearish. If it is 8.8k caves, even heavier bids at 8.4-8.5k,” said trader CryptoGainz.
But Worry Not, Normal Bull Market Retracement Level
With over 18% losses, Ethereum Classic is the top loser among the top cryptocurrencies. Chainlink and Tezos lost the least amount of value, 0.68% and 5.61% respectively.
The “hard cold truth” according to trader Cantering Clark, is that the altcoins that have been surging in the alt season will “go on to make new lows, and repeat this pattern again.”
“As for BTC, always be prepared to be completely wrong. A lot of trading in general is about preparation. When Bitcoin drops there is much more reflexivity in price because no one really agrees on a fair value. Price is what determines value, overthrow is then tremendous,” said Clark.
Meanwhile, analyst Bob Loukas said though support is looking weak at the current price bitcoin is at and we could very well go lower, it is still a “normal bull market retracement level.”
Also, prominent analyst PlanB shared that the cointegration of the bitcoin price and the stock-to-low model, which predicts BTC value at above $100k by Dec. 2021, is still intact. The model actually puts the current bitcoin price at $8,685.
Bitcoin- a risk-off or safe haven asset?
Bitcoin’s drop came when the stock market rebounded today after the S&P 500 lost nearly $1.737 trillion in value in the past two days, according to S&P Dow Jones Indices’ Senior Index Analyst Howard Silverblatt.
Risk assets are struggling as concerns surrounding deadly coronavirus (COVID-19) cases continue to rise outside of China, where it originated.
Gold also saw greens on Wednesday after sliding yesterday. The bullion that hit 7-year highs as “a typical flight into safe havens,” has been expected to hit a new peak yet, as the possibility for another Fed rate cut by 25 basis points rises.
The fact that leading cryptocurrency has been losing value in the current unstable environment raises a question on it being a safe haven asset.
Additionally, as we reported, Coin Metrics found that the correlation between Bitcoin and the precious metal has been negative over the past 30 days, which further adds “evidence to the thesis that BTC only reacts to certain types of events and not others.”
One possible explanation could be that the coronavirus is more of a macroeconomic shock than an uncertain geopolitical situation. According to Coin Metrics, BTC just might have characteristics of both risk-off and safe haven assets.
“Bitcoin is neither a risk-on nor a risk-off asset at this point. It still marches to the best of its own drum. The actions of whales and leveraged traders are far more meaningful than any macro concerns,” said digital asset trust company, BitGo co-founder Ben Davenport.
Are you unsure about how to buy bitcoin, then don’t be afraid, its not as complicated as you may think.