Will we be able to see Bitcoin in free fall in the coming days?
Then, Bitcoin fell again; this time, it dropped from $ 11,000 to $ 10,280. This just confirms that Bitcoin is again limited to the range, between $ 11,000 and $ 10,000, with a tolerance of $ 500 on both sides.
The first thing to understand about this drop is that it has not been located; that is, the crash was not just for Bitcoin or the broader cryptocurrency market, but was witnessed in the stock markets, metals like gold, silver, etc.
It is strange how the cryptocurrency market is in sync with the broader traditional market. This correlation is not just a surprise, but has been apparent for over a month.
Although the fiscal stimulus package to alleviate the woes caused by COVID appears to have worked, the house of cards that was built on top of it is facing worrying winds. A good measure of metaphorical winds is the CBOE VIX, which is comfortably above the 20 mark and has reached a high of 31.
The higher the VIX, the more volatility and uncertainty the market will have. This metric generally increases during unstable market conditions, such as the 2008 recession or before the intervention of the feds during the COVID pandemic.
So, here are some reasons why this failure may be happening:
Fear of another wave of COVID in the UK and talk about lockdown. Another quarantine will definitely hurt the UK economy and that certainly left investors agitated.
Negotiations on a new COVID stimulus project in the USA and its effect on the elections.
What to expect?
As for the price of Bitcoin – it is currently at $ 10,460, trying to regain resistance at $ 10,500. However, in the daily period, the bearish crossover has just appeared and, therefore, we can expect some more bearish trends. Perhaps a dispute at the $ 10,500 level before sweeping down to the lower $ 10,000 levels.
With the VIX above 20, we can expect an unstable price action in the stock markets. Due to its correlation, we can expect the same for Bitcoin. Therefore, deleveraging may be the best idea here.
Last but not least, never trust the weekend pump / dump, as Bitcoin tends to retrace its steps as the new week begins.