One can clearly find that in a period of economic uncertainty, the price of Bitcoin is closely related to the fluctuation of the stock market. Recently, as the current economic situation has not yet recovered and the new coronavirus pandemic still seems to have no end in sight, people’s panic has intensified, leading to a sharp decline in the stock market.
Bitcoin prices are closely related to the recent stock market decline, as investors are currently anxious about whether the US will launch a second stimulus package. When the stock market is in chaos, it is difficult for Bitcoin to rise again. According to the cryptocurrency economist Alex Kruger (Alex Kruger) predicted that under the current global economic uncertainty, the price of Bitcoin is very likely to fall to $9,000.
In addition to the pressure on the stock market caused by the new crown pneumonia epidemic, the uncertainty of international competitions and the postponement of the upcoming US presidential election may also be important factors that cause the volatility of bitcoin prices.
As of press time, Bitcoin is currently trading at $10,452. The world’s largest cryptocurrency has fluctuated sideways in the past 24 hours and has fallen 3% so far in the past week. Following the stock market crash on Monday, the price of Bitcoin fell from $10977 to $10,400 within a few hours. Once there is no progress in any economic stimulus measures, it may cause the price of Bitcoin to continue to fall.
Market analysts have previously hinted that it will take a few years for Bitcoin to completely decouple from the traditional market, but another analyst has a different view. The on-chain analyst said that the decline in the stock market will eventually stop pulling down the price of Bitcoin. Bitcoin may break its correlation with the stock market and may rebound toward higher prices.
Bitcoin and the stock market decoupling?
Although the data shows that there is a strong correlation between Bitcoin and stocks, cryptocurrency analyst Willy Woo explained that if a large-scale stock market crash occurs, the correlation between Bitcoin and the stock market will eventually be broken. Regarding the recent Bitcoin sell-off, he said:
“From the information I have collected on the chain, this sell-off will catch most spot investors by surprise, and there is usually no large-scale on-chain activity before this. The only phenomenon of selling is It can happen on the exchange. The correlation of stocks dragged down Bitcoin’s weekly bull market.”
“The current stock market looks very vulnerable. If the plunge continues, Bitcoin will decouple from the stock market in the next few months. People will be surprised if that happens. After the Bitcoin halving and the amount of derivatives trading The reduction has fundamentally alleviated the selling pressure of Bitcoin against the bullish fundamentals of anti-inflation hedges.”