Bitcoin suffered a strong correction from its 2020 high of $12,400 that it recorded last August, and led the cryptocurrency to return below $10,000 for a brief period to rebound to the level of $11,200 for a short period at the beginning of this September, and then re-drop. Back to $10,500 trying to hold out in this range so far.
Although the correction was sharp, the selling is very similar to the tops of a bull market Pepperstone In the recent period, which made the sentiment turn bearish quickly, causing investors to fear more about the bearish trend in the future.
However, analysts say the latest peak in bitcoin's price action looks a lot like the pattern that pulled the coin out of the bottom of its bear market sending it close to $20,000 at the end of 2017, so the cryptocurrency is likely to resume its bullish trend.
It is worth noting that the low volatility in Bitcoin in recent days coupled with the cautious growth in prices, is a good signal to buy amid strong market hopes for irrational growth and fresh impulses.
Bitcoin and stocks
The moves of the world's largest cryptocurrency confirm its dependence on the stock market, which is experiencing declines along with the traditional market and is still under pressure. Globally, along with the Federal Reserve's warnings that the economy is still in recession, at the same time Bitcoin started dropping around $10,000 and then paused to slowly rise.
During the last week's trading, bitcoin lost more than 5%, however, the coin's dominance index grew by about 1.5% during the same period, as the altcoin liquidation strengthened to lose the Ethereum coin towards 14% last week.
Cryptocurrencies are correcting
Bitcoin is often viewed as a haven asset and a hedge against inflation which makes it positively correlated with gold. This relationship works when investors want to protect their wealth from currency devaluation and many other economic risks.
However, rising geopolitical tensions and global uncertainties are pushing Bitcoin into a riskier asset and making it completely linked to stocks, and investors currently have many reasons to panic:
Europe is on the cusp of reopening its closures again, with a renewed rise in the number of coronavirus cases being recorded daily, and some countries imposing new restrictions while Britain considers a complete quarantine again, the United States is also going through severe turmoil before the battle The presidential election between President Trump and candidate Joe Biden, which increases the state of tension and turmoil.
Given the above facts, the currency may become subject to additional selling, as long as global markets experience high levels of volatility and uncertainty, the major cryptocurrency will drop and start to recover after things calm down.
Bitcoin may tend to be volatile before the US elections and subside afterwards, a time of panic usually distorts correlation patterns meaning that the parallels between gold and Bitcoin, stocks or any other assets are meaningless.
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