First Mover: Bitcoin Falls as COVID-19 Surges, ECB's Lagarde Steps Up, US GDP Hits 33%

Published on by Coindesk | Published on

Cryptocurrency analysts looked for solace in bitcoin's October-to-date return, still at an impressive 22%, during a month when the Standard & Poor's 500 Index of U.S. stocks has declined by 2.7%."The sell-off in equities and gold due to rising COVID infections and restrictive lockdowns had only a limited impact on the digital asset," Lennard Neo, head of research for the cryptocurrency-focused firm Stack Funds, wrote Thursday in a report.

Just as bitcoin bulls were starting to salivate over the cryptocurrency's powerful rally over the past week toward $14,000, a sell-off in traditional markets has dragged prices back down.

Such restrictions could crimp economic growth, theoretically a deflationary development, which could reduce demand for bitcoin in the short term as a hedge against higher consumer prices.

One of the easiest things to sell is bitcoin, which is still up 84% year-to-date, even after Wednesday's sell-off.

As detailed in First Mover on Wednesday, analysts relying on price-chart patterns have identified few points of resistance along bitcoin's path from the hitherto rarely breached $14,000 psychological level to the all-time-high around $20,000, reached in 2017.According to Greenspan, "$14,000 is a huge psychological barrier, and I would be delightedly flabbergasted if we were able to pass through it without first seeing a significant pullback.

As reported Thursday by CoinDesk's Omkar Godbole, bitcoin options traders are assigning a low probability that the cryptocurrency will end 2020 above $20,000.

Despite the sincerest wishes of bitcoin bulls, it would take a rally of more than 60% in the next eight weeks for prices to set a new record.

"If we extrapolate bitcoin's price action and volatility of the past 90 days till December expiry, then bitcoin appears set to end the year between $14,000 to $15,000."

Stock markets will likely stabilize, helping bitcoin regain poise if the ECB announces more monetary stimulus later Thursday.

FTX crypto exchange launches bitcoin pairs for tokenized versions of top stocks Amazon, Apple, Tesla.

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