Has or Hasn’t Bitcoin [BTC] answered the Safe-Haven Call?
Last year, Bitcoin [BTC] price rose from $4200 to $14,000 beginning the correlation with gold, in the face of the US-China Trade War. Currently, it stands a bigger confluence level that last year with the COVID-19 crisis.
Moreover, in April the sentiments of the traders were similar to it is now. Here’s a fractal which explains it:
The break-out in early April 2019 seemed to mark the beginning of the bull-run. Short BTC on Duedex
Previously, Bitcoin accumulated for nearly 16 weeks in the bottom range before the break-out above $4,800-$5,000 began a bull trend above up to $8,800. Currently, it seems to be recovering from a V-shaped bottom in less than 2 weeks.
Moreover, another notable bullish fractal on Bitcoin compared this break-out with the second phase of the run from $8,500-$14,000.
Either way, the markets were driven predominantly over futures traders’ bearish sentiments. In hindsight, the buying during the PlusToken scam was also a prominent reason for the bull run.
Nevertheless, the tension between the US and China had a significant role in building the safe-haven argument for Bitcoin, which supported the fundamentals around the bull-run.
Furthermore, a series of short-squeeze pushed the markets to yearly highs as whales fed on the liquidity provided by bears.
Correlation Does Not Equal Causation
The correlation with the stock markets presents a similar fear as last year, in terms of Bitcoin still being a risk-asset and not maturing to a safe-haven just yet. Cantering Clark (alias), a prominent crypto-trader echoed with BitMEX CEO, Arthur Hayes’ analysis how the correlation could drive Bitcoin down with it to $3000. He notes in a series of tweet,
Anyone who thinks that Bitcoin is just going to do an about-face after showing its hand in a time of crisis is still at the whim of too many cognitive biases to name. The dollar is going to suck up liquidity, Gold as well.
The maximum correlation with gold achieved with the price of gold was around 0.25. The levels with the S&P 500 index currently is around 0.5. Moreover, in the past as well during the bear market of 2018, there was a strong correlation of around 0.3 with the stock market.
The Fed and Government believe that the economy will be ready to jump soon and we’re likely to expect to a surge ahead. The retracement of the stock market above the $2793 marks an important level for the beginning of revival towards the highs again. However, the high debt of the Governments along with a recessionary economic background projects adverse trends ahead.
