- Bitcoin briefly fell below $ 7,000 when US oil prices dropped to their two-decade low.
- The price of the cryptocurrency declined alongside US stocks and gold markets, again showing risky behavior.
- The US dollar, on the other hand, jumped on the demand for safe havens.
Bitcoin briefly fell below its $ 7,000 support, which appears to be a panic sell-off caused by disruptive US oil prices before the New York morning bell.
The benchmark cryptocurrency fell 2.95 percent to hit an intraday low of $ 6,920. It soon recovered some of its losses and reclaimed $ 7,000 to mark the presence of bulls. However, it hinted at a turbulent week as it continues its short-term correlation with bearish US stocks.
Clearance of the US market
The US benchmark S&P 500 should start in the negative territory on Monday, with its futures signifying a 49 point cut, according to CNBC pre-market data. His downward forecasts followed the collapse of the US West Texas Intermediate oil benchmark to its two-decade low.
It fell 30 percent to $ 11 a barrel as the freeze hit oil demand as a result of the rapidly expanding coronavirus pandemic.
Oil futures, S&P futures and Bitcoin are all falling. Everyone is dancing to the same drum pic.twitter.com/pdaBT1ULde
– Joe Weisenthal (@TheStalwart) April 20, 2020
The dangers lurking in the US financial market related to an otherwise uncorrelated asset like Bitcoin. Lately, investors have been selling the cryptocurrency to cover their losses elsewhere. Bitcoin’s top competitor, gold, suffered similar sales during the collapse of US stocks.
Yellow metal fell 0.68 percent to $ 1,671.21 an ounce during Monday’s European session.
Bitcoin is now at risk of expanding its downward moves as investors switch to the US dollar as a short-term safe haven before the release of macro data and corporate earnings this week. Coca Cola, Netflix and Delta Airlines would release their first financial reports during the coronavirus pandemic, which has caused investors to become more volatile.
US dollar up; Problems for bitcoin?
While Bitcoin, Gold and US stocks are falling, the demand for US dollars remains strong. The US dollar index, which shows the greenback versus a foreign currency basket, rose 0.34 percent on Monday due to the demand for safe havens.
As the market continues to go into recession and economic disruption continues with increasing coronavirus cases, Bitcoin is one of the assets that would continue to be exposed to the risk of bearish fluctuations. Its short-term profitability could make it an ideal asset to liquidate in US dollars and increase downward pressure.
Gold and the US dollar remain among the highest reserves in this crisis. pic.twitter.com/0MVMHBBpsY
– Daniel Lacalle (@dlacalle_IA) April 20, 2020
So far, Bitcoin has kept its April gains.
Cover picture about Unsplash.