Bitcoin Drops Below $9,000 Due to Concern Over Surge in COVID-19 Cases
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Around 19:45 UTC on Saturday (June 27), the price of Bitcoin dropped below the $9,000 level for the first time since May 27 due to growing concerns over the surge in the number of COVID-19 cases in the U.S. and some other parts of the world.
Data from Johns Hopkins University’s Coronavirus Resource Center tells us that the first case of COVID-19 in the U.S. was reported 155 days ago, and that since then, 2,467,554 COVID-19 cases and 125,039 deaths have been reported there.
On Friday (June 27), the number of daily confirmed new cases (5-day moving average) reached 40,021 in the U.S., and as you can see in the chart below, the daily number of new cases is going up not just in the U.S., but in Brazil, India, Mexico, and some other parts of the world:
Regardless of whether the U.S. is still going through the first wave of COVID-19 or it has started experiencing the second wave, there is no denying that what is happening now could severely impact the re-opening of businesses across the country, especially in those states that have recently been badly hit, such as Arizona, Florida, and Texas.
Renewed concerns over the impact of COVID-19 on the U.S. economy resulted in big losses on Friday in the U.S. stock market, with the Dow, the S&P 500, and the Nasdaq finishing the day down 2.84%, 2.42%, and 2.59% respectively.
As we have seen since the start of the COVID-19 pandemic, Bitcoin has shown on several occasions a moderately high positive correlation to the S&P 500, and this week it has been been no different.
According to data from CryptoCompare, Bitcoin is currently (as of 22:57 UTC on June 27) trading at $8,981, down 2.11% in the past 24-hour period:
Since Wednesday (June 24), Bitcoin has dropped from $9,655 to $8,981, i.e. a loss of almost 7% in just three days. Bitcoin’s drop below the $9,000 level occured at around 19:45 UTC on June 27.
Just a few hours earlier, prominent crypto analyst Alex Krüger noted the return of Bitcoin’s positive correlation with U.S. stocks, and said that his technical analysis of large cap U.S. stocks sugegsts that the next few days would be difficult for both stocks and Bitcoin, and predicted Bitcoin’s fall below the $9K level:
Crypto has been following stocks again in the last few weeks. Charts for large caps look rather bleak. I place higher odds on a $BTC 500-1000 downmove than on a 500-1000 upmove. Reduced long exposure accordingly. I’d be surprised if 9K is not run over in the following few days.
— Alex (@classicmacro) June 27, 2020
He went on to say that this “short term noise” did not affect the long term bullish outlook for Bitcoin:
Sentiment across professional traders is 50/50 from what I gather. I see this as tradeabkle short term noise. Bigger picture bullish outlook unchanged.https://t.co/zM6Epvb0Cs
— Alex (@classicmacro) June 27, 2020
Around the same time that Krüger was giving his short term price prediction for Bitcoin, Joseph Todaro, Managing Partner at crypto-focused investment firm Blocktown Capital, sent out a tweet that showed that he is another one of those people in the crypto community who believes that there is currently a high degree of positive correlation between Bitcoin and the S&P 500:
Talking about short term bitcoin price action right now without considering the SPX is the same as talking altcoin charts without bitcoin
We are still highly correlated
If SPX dumps, bitcoin is going with it
— Joseph Todaro (@JosephTodaro_) June 27, 2020
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