Despite the crash of the Nasdaq stock market index, a consecutive three week drop in the price of Bitcoin, dropping below the US$10,000 mark; the crypto-currency market seems relatively stable or even bullish in the medium term according to an Onchain analyst.
Today, Bitcoin (BTC) continues to suffer from negative sentiment and red numbers, bringing in its wake many other cryptocurrencies.
On September 1, 2020, Bitcoin's price exceeded $12,000, considered a resistance threshold in the industry, but then the price dropped 12% in one week.
Bitcoin is now valued at $187 billion. Ether and cash Bitcoin lost 19% and 16.8% respectively over the same period. Could the crash on Nasdaq have something to do with this dump in the cryptocurrency market? Let's examine these different elements.
The current situation of the financial markets has many similarities with the one at the beginning of last March (2020). As a result of the worldwide spread of coronavirus, the various stock and crypto prices had fallen.
A few minutes after the opening of the American stock exchange on Monday, March 09, 2020, the S&P 500 index quickly sank, dropping 11% during the week. The Dow Jones fell by 13% and the Nasdaq by 10%.
For example, in the United States, the Dow Jones Industrial Average closed down 2,352.60 points or 9.99%, its worst fall since the 'Black Monday' crash of 1987.
On the cryptocurrency side, it was even worse because the price of Bitcoin fell 30% over the same period. On Friday March 13, in only 24 hours Bitcoin dropped below $6000 for the first time since May 2019, 10 months ago. Respectively,
- Ether (ETH) had decreased by 30% in 5 days, 56% during the month of February;
- XRP (XRP) had decreased by 25% in 5 days and by 52% during February;
- Bitcoin Cash (BCH) was down 32% in 5 days and 60% in February.
Now, at the beginning of September 2020, the Nasdaq values continue to fall. Apple, Tesla, Amazon have lost hundreds of billions of dollars of market capitalization in a few hours. It may still be too early to say that this is a stock market crash but the impacts of the COVID-19 pandemic on the economy are very real and visible, disrupting all types of businesses. The American and Canadian markets have fallen in value by 3% and 2% respectively.
In any case, the cryptos market is suffering and the cryptosphere is wondering whether the bull market of Bitcoin 2020, which has seen the price of Bitcoin rise from around $4,000 to $12,000, could come to an abrupt end if the price drops below $10,000 per Bitcoin.
It can be observed that the crypto-currency market and the crypto sphere are also largely suffering from the current situation in the financial markets. We have the right to wonder whether the rise in the price of Bitcoin in 2020, which has seen its price rise from $4,000 to $12,000, could come to an abrupt end with a price falling below $10,000 per unit.
Bitcoin should pass through the $10,756 pivot level to reach the first major resistance level at $11,587. Broader market support would be required for Bitcoin to return to levels above $11,000.
Unless there is a prolonged crypto rally, the $11,000 resistance would likely leave Bitcoin below the first major resistance level.
In the event of a break, Bitcoin could test the $12,000 resistance before any withdrawal. However, Bitcoin would probably be well within the second major resistance level, at $12,898.
Failure to pass the $10,756 pivot would bring the first major strength level into play at $9,445.
Unless there is another prolonged divestiture, Bitcoin should avoid levels below $9,000 and 23.6% BIF of $8,900. The second level of major support is $8,615.
In five days, the price of Bitcoin has fallen from $11,462 to $10,000, down 12.6%. Following Bitcoin's fall, ether (ETH) also lost much of its value, falling more than 8% on Monday, September 7, and trading at $348.
Despite these declines, Willy Woo, an on-chain market analyst, says that the medium-term uptrend in the cryptocurrency market is being maintained and local chain indicators are becoming bullish. Willy Woo explained on September 06:
'On-chain data points probably indicate a medium-term uptrend due to Bitcoin's sharp decline since $12,000. Network activity remains relatively stable.
These indicators include HODLing activity, active addresses, network activity and NVT ratio. Bitcoin's NVT signal, for example, attempts to identify market peaks by evaluating the price in relation to the value of daily transactions.
The level that many traders observe is the $9,650 CME spread. A spread between the Bitcoin CME futures market and other exchanges is formed when the CME closes over the weekend. The spread of $9,650 has been present since July.
Mr. Woo also spoke about the gap and the probability of CME falling into it:
'I also wonder if the gap is front run, to fill long positions with solid liquidity. The whales on derivatives exchanges have a inefficiente dominant position for this to happen.
The value of bitcoin now amounts to 187 billion dollars. Although the reasons for the recent collapse remain unclear, the main question for the cryptocurrency markets is whether the famous rescue rally is imminent or whether the downward movement will continue.
Written by Laetitia Harson
Cartam: Free marketplace for cryptocurrency users
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