An overnight attempt to crash Bitcoin alongside the US stock market met with extreme resistance as the cryptocurrency bounced back handsomely.
Interestingly, the brief downside attempt in the Bitcoin market appeared almost in sync with a similar sell-off across the US stock market. The Dow Jones Industrial Average plunged 650 points, or 2.3 percent, logging its worst one-day decline since September 3, led by a drop in leisure and travel stocks.
Meanwhile, the benchmark S&P 500 and the tech-savvy Nasdaq Composite dropped 1.9 percent and 1.6 percent, respectively. Together, all three indexes were down more than 5 percent from their record peaks earlier this year.
BITCOIN NOT INFECTED
That is increasing worries about tighter lockdown restrictions and their impact on an already-suffering US economy.
Analysts believe no package will come up until the November 3 presidential election. That explains why investors are seeking safety outside equities.
“BTC is now above where it was 24 hours ago, even though the Dow Jones dropped 640 points today. That is impressive, especially to those who (mistakenly) thought the two asset classes were correlated. Year-to-date, the US stock market is negative. BTC is +80%.”
GOLD CORRELATION BACK
The overnight sell-off and subsequent recovery in the Bitcoin market attest to the renewed demand. The cryptocurrency traded more in line with gold, a traditional rival asset, than with the risky stocks, showing that investors are beginning to explore its safe-haven characteristics.
That party explains Bitcoin’s ability to hold $10,300 as its interim support amid unsupportive fundamentals.
That party explains Bitcoin’s ability to hold $10,300 as its interim support amid unsupportive fundamentals.