BTC: How Will Bitcoin React To Trump Testing Positive?
After a few of the most uneventful news this week, Friday (Oct. 2) has brought a couple of interesting developments that are rather unexpected. Just a few hours ago, United States President Donald Trump announced on Twitter this morning that he and First Lady Melania Trump had tested positive for COVID-19, an unexpected movie plot twist that has sent shudders down into the global economy at the time of writing. Will Bitcoin become the safe haven for investors after such an incident? We are shunned by such an incident as well, but let's dive into some of my deeper thoughts on both sides of the spectrum, as we are seeing gold decouple from Bitcoin.
Overview / Current Aftermath / Technical Analysis:
At the time of writing, Bitcoin has fallen 2.5% as the news broke out dropping from $10,660 to $10,300, and is now stabilizing on the short term with a slight bullish divergence on the one hour time frame. From a technical standpoint, we can assume there needs to be some form of a recovery bounce; however, there was a larger fall when the BitMEX news broke a few hours before that, where Bitmex has been accused of preventing money laundering. There has been a minor recovery to the $10,450 levels at the time of writing which has put the asset back to weekly support near the 20MA. From a larger perspective, the 20MA has acted as a strong support for Bitcoin, but with more unexpected global crisis looming, we aren't sure of the outlook on Bitcoin. As Bitcoin has been a traditional safe haven investment, we have been witnessing Bitcoin slowly align with traditional equities markets, where we aren't seeing the true decoupling from the stock markets.
Looking at the larger picture and time frame, Bitcoin is still within its range-bound channel and this reaction by the news-selling bears has been just a blip. But what about the short term? We can expect some form of reaction most certainly during and after the hours of US trading hours, whether it will be up or down - we do not know for certain. Gold prices has spiked over a percent in a short time span following the news taking the precious yellow metal back over $1,900/oz again. Highlighting the investor flight from risk was a drop in Bitcoin, with Bitcoin down by more nearly 4% on the day, while Ethereum fell by 6-8%, respectively.
US futures on the S&P 500, Dow Jones and Nasdaq 100 traded around 1-1.5% lower, suggesting the major indices will fall at the start of trade later on today, while oil suffered the heaviest blow, sliding by more than 3%, as investors fled risk-linked assets. Even the US dollar came under strong pressure to the benefit of typical safe haven assets such as the Japanese yen, gold and US Treasuries - all of which are up at the time of writing, respectively.
Bullish Perspective:
Analysts who have been less critical of Bitcoin and other cryptocurrencies in the past seem to believe that BTC won’t be too drastically affected by today’s chaotic news cycle–after all, it hasn’t been (at least, not yet.) As stated by Joseph Young, a crypto market analyst from Forbes, has stated, "...BitMEX charge and Trump contracting COVID-19 couldn’t take Bitcoin far below the 10k level even briefly... The resilience of Bitcoin during this cycle is quite impressive.” Similarly, Marcel Burger, founder of crypto investment consultancy boutique Burger Crypto, wrote on Twitter that “Trump testing positive on COVID and the entire market tanks again. Bitcoin also dealing with bad news around Bitmex (founders arrested), but actually manages to control the damage. Pretty bullish to me.” The election cycle will continue to have a big effect on crypto prices, but how far? That is only determined by time and the equities market.
It’s true–BTC’s +/-5% immediate reaction to either (or indeed, both) of these events could almost be considered a non-reaction in the history of an asset that is known for its extreme volatility. Still, the real reaction to these two events–and to their related affairs–could still be on the horizon as we still haven't seen a real reaction by traditional markets such as the SNP500 during opening hours. For example, Trump’s COVID case will likely have a significant effect on the US Presidential election cycle, which, in turn, could have a big effect on the price of Bitcoin, instead. While even before Trump tested positive for COVID, the American election cycles were having an increasingly powerful effect on cryptocurrency prices; and it isn’t all sunshine and beautiful angels. Most people have always more or less re-invested back into Bitcoin, eventually, as we have witnessed in August, for example.
Bearish Perspective (Higher Probability):
While both the BitMEX indictment and Trump’s COVID case made it into the New York Times today, one of these just might be more significant than the other. Both have immediate and long term effects on Bitcoin, regardless of how Bullish Bitcoin may be. Indeed, while the BitMEX's case is more specific to the cryptocurrency world, Trump’s COVID contraction seems to be having a more powerful effect on crypto markets on the immediate term. The BitMEX news has caused a 3% fall in the price of Bitcoin. Prices rebounded before Trump’s COVID Tweet sent them back down again. Together, these two stories still acted as a negative effect for Bitcoin prices in the immediate follow up. If traditional financial markets are any indication of what’s coming for BTC and other cryptocurrencies (and, historically speaking, they have been - even more so currently during the COVID-19 pandemic), further price drops could be on the horizon - short term and long term. Markets outside of the cryptosphere are reacting to Trump’s COVID announcement similarly to the way that they reacted to the widespread lockdowns in March: for example, gold is continuing its rally to the upside, continuing the rebound that began ahead of Tuesday’s presidential debate due to the uncertainty and uneventful news that followed.
Stock markets, however, can be a completely different story. If our analysis on Bitcoin and the Stock Market's correlation continues to be true, we may see further downfall for Bitcoin. The BBC reported just a few moments ago that, “(the) stock market futures showed that all three of America’s main indexes – the Dow Jones, the S&P 500 and the Nasdaq – are set to drop by at least 1.5% each when trading begins on Friday...” A number of analysts, including the X Force Global, are predicting that BTC will go the way of the stock market, just as it did when the COVID financial crisis began in March of this year. These eventful news will only exaggerate the price drops.
Trade Safe.
X Force
Overview / Current Aftermath / Technical Analysis:
At the time of writing, Bitcoin has fallen 2.5% as the news broke out dropping from $10,660 to $10,300, and is now stabilizing on the short term with a slight bullish divergence on the one hour time frame. From a technical standpoint, we can assume there needs to be some form of a recovery bounce; however, there was a larger fall when the BitMEX news broke a few hours before that, where Bitmex has been accused of preventing money laundering. There has been a minor recovery to the $10,450 levels at the time of writing which has put the asset back to weekly support near the 20MA. From a larger perspective, the 20MA has acted as a strong support for Bitcoin, but with more unexpected global crisis looming, we aren't sure of the outlook on Bitcoin. As Bitcoin has been a traditional safe haven investment, we have been witnessing Bitcoin slowly align with traditional equities markets, where we aren't seeing the true decoupling from the stock markets.
Looking at the larger picture and time frame, Bitcoin is still within its range-bound channel and this reaction by the news-selling bears has been just a blip. But what about the short term? We can expect some form of reaction most certainly during and after the hours of US trading hours, whether it will be up or down - we do not know for certain. Gold prices has spiked over a percent in a short time span following the news taking the precious yellow metal back over $1,900/oz again. Highlighting the investor flight from risk was a drop in Bitcoin, with Bitcoin down by more nearly 4% on the day, while Ethereum fell by 6-8%, respectively.
US futures on the S&P 500, Dow Jones and Nasdaq 100 traded around 1-1.5% lower, suggesting the major indices will fall at the start of trade later on today, while oil suffered the heaviest blow, sliding by more than 3%, as investors fled risk-linked assets. Even the US dollar came under strong pressure to the benefit of typical safe haven assets such as the Japanese yen, gold and US Treasuries - all of which are up at the time of writing, respectively.
Bullish Perspective:
Analysts who have been less critical of Bitcoin and other cryptocurrencies in the past seem to believe that BTC won’t be too drastically affected by today’s chaotic news cycle–after all, it hasn’t been (at least, not yet.) As stated by Joseph Young, a crypto market analyst from Forbes, has stated, "...BitMEX charge and Trump contracting COVID-19 couldn’t take Bitcoin far below the 10k level even briefly... The resilience of Bitcoin during this cycle is quite impressive.” Similarly, Marcel Burger, founder of crypto investment consultancy boutique Burger Crypto, wrote on Twitter that “Trump testing positive on COVID and the entire market tanks again. Bitcoin also dealing with bad news around Bitmex (founders arrested), but actually manages to control the damage. Pretty bullish to me.” The election cycle will continue to have a big effect on crypto prices, but how far? That is only determined by time and the equities market.
It’s true–BTC’s +/-5% immediate reaction to either (or indeed, both) of these events could almost be considered a non-reaction in the history of an asset that is known for its extreme volatility. Still, the real reaction to these two events–and to their related affairs–could still be on the horizon as we still haven't seen a real reaction by traditional markets such as the SNP500 during opening hours. For example, Trump’s COVID case will likely have a significant effect on the US Presidential election cycle, which, in turn, could have a big effect on the price of Bitcoin, instead. While even before Trump tested positive for COVID, the American election cycles were having an increasingly powerful effect on cryptocurrency prices; and it isn’t all sunshine and beautiful angels. Most people have always more or less re-invested back into Bitcoin, eventually, as we have witnessed in August, for example.
Bearish Perspective (Higher Probability):
While both the BitMEX indictment and Trump’s COVID case made it into the New York Times today, one of these just might be more significant than the other. Both have immediate and long term effects on Bitcoin, regardless of how Bullish Bitcoin may be. Indeed, while the BitMEX's case is more specific to the cryptocurrency world, Trump’s COVID contraction seems to be having a more powerful effect on crypto markets on the immediate term. The BitMEX news has caused a 3% fall in the price of Bitcoin. Prices rebounded before Trump’s COVID Tweet sent them back down again. Together, these two stories still acted as a negative effect for Bitcoin prices in the immediate follow up. If traditional financial markets are any indication of what’s coming for BTC and other cryptocurrencies (and, historically speaking, they have been - even more so currently during the COVID-19 pandemic), further price drops could be on the horizon - short term and long term. Markets outside of the cryptosphere are reacting to Trump’s COVID announcement similarly to the way that they reacted to the widespread lockdowns in March: for example, gold is continuing its rally to the upside, continuing the rebound that began ahead of Tuesday’s presidential debate due to the uncertainty and uneventful news that followed.
Stock markets, however, can be a completely different story. If our analysis on Bitcoin and the Stock Market's correlation continues to be true, we may see further downfall for Bitcoin. The BBC reported just a few moments ago that, “(the) stock market futures showed that all three of America’s main indexes – the Dow Jones, the S&P 500 and the Nasdaq – are set to drop by at least 1.5% each when trading begins on Friday...” A number of analysts, including the X Force Global, are predicting that BTC will go the way of the stock market, just as it did when the COVID financial crisis began in March of this year. These eventful news will only exaggerate the price drops.
Trade Safe.
X Force
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📢 Twitter | twitter.com/XForceGlobal
🎥 YouTube | youtube.com/c/XForceGlobal
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