Bitcoin halving seems almost complete as the price has successfully halved from $10.5k to $5.7k. However, most of the traders that were waiting for halving are all of a sudden not heard of anymore. So, this recent crash was pretty brutal and I have to admit it exceeded my expectations. I would not have imagined BTC/USD crashing below $6.7k in just one day, but most of you who follow my analyses would know that I have been short on the market. I repeatedly said how it was not over yet and when the market makers and whales kept on pumping the price towards $8k it became more obvious to me that it wasn’t over and something big was in the offing.
As it turned out the market ended up crashing hard. Altcoins were completely obliterated. Small cap coins lost more than 50% of their value in one day. A lot of investors panic sold and we saw close to $1 billion Bitcoin long positions liquidated on Bitmex alone. This is a big deal and there is absolute panic in the market at the moment. However, as contrarians, we always take advantage of extremes in sentiment. When the market is highly optimistic, we look for short selling opportunities and when the market is overly pessimistic, we look for buying opportunities. At this point, I really want to see BTC/USD to decline down to the 200-week moving average and to test it before I enter any positions.
The S&P 500 (SPX) seems all set to decline down to the 61.8% fib level. In my opinion, the price is likely to break slightly below that and to test the 200-week moving average. If the index finds support there, I would be near-term bullish on the stock market as well as Bitcoin. However, long term I cannot ignore the potential threat that Coronavirus poses to business and finance across the globe. I have been avidly discussing this since the first day of the outbreak. It has now shaped up to be a global pandemic and will seriously hurt the world economy.
Gold (XAU/USD) that has traditionally been a safe haven asset for a long time seems to be in no position to perform well this time. In fact, we could see a major decline in gold prices should we see a break below the rising wedge. This would put further sell pressure on Bitcoin as well. The FTSE 100 gave up most of its gains and President Trump has now imposed a ban on travelers from Europe. The end result of all that is absolute carnage in financial markets. However, there is one beneficiary and that is cash, more precisely the US Dollar. As the Dollar Currency Index (DXY) has just climbed above the 200-week moving average, we can expect an uptrend in the index in the weeks and months ahead putting more pressure on Bitcoin and other cryptocurrencies.