- Bitcoin is trying to stay above $10,000 but support has been weakening
- Analysts warned of further sell-off if the stock market continues to decline
- Analysts also said gold must first move significantly if Bitcoin is to increase in price again
Bitcoin failing to sustain a value above $11,000 is not just mere technical rejection but a reflection of the global equity markets turmoil. With looming uncertainty in the traditional markets, analysts think Bitcoin could further experience another sell-off below $10,000.
Bitcoin opened Tuesday at $10,416 and closed slightly higher at $10,534. This figure is 1% higher than the previous day’s closing price, but still 14% lower than the 2020 all-time high price of $12,298.
While the latest price behavior is a clear rejection of $11,000, outside factors, particularly the stock market and the U.S. dollar, continued to affect Bitcoin. The upcoming 2020 U.S. Elections is also adding more uncertainty. In a statement to news outlet Coindesk, Stack Fund Co-Founder and CEO Matthew Dibb said that a sustained risk-off in the equity markets could lead to major moves across the cryptocurrency market.
“Bitcoin may revisit September lows (around $9,870),” he added.
Bitcoin’s correlation with the stock market has been documented especially after the March 2020 crash. Because September has generally been a weak month for the S&P 500, it’s possible that Bitccoin would perform poorly as well for the entire month and at least up to October.
“BItcoin could be in for some big bumps over the next six weeks,” crypto analyst Lark Davis said in a tweet.
Still, according to Dibb, even if the stock market makes a slight uptick, Bitcoin would not move unless gold does. Bitcoin has been heavily correlated with the shiny metal, attributing to their similar characteristics like scarcity, which makes them a good store of value in times of economic uncertainty. Gold and Bitcoin, Coindesk said, now have a positive correlation with each other in the last sixty days.
The other factor affecting the price of Bitcoin is the U.S. dollar’s increasing strength. In particular, the U.S. dollar index (DXY) has indicated a breakout after two months of consolidation. It should be remembered that when Bitcoin went to $12,000, the U.S. dollar was experiencing immense sell-off. For now, traders would observe how the market would react to Federal Reserve chairman Jerome Powell’s recent speech to Congress.