Bitcoin Slips in Tandem with US Stocks; Still a Safe-Haven?

0
7

Bitcoin fell by as much as 5.54 percent on Wednesday after bond markets warned the possibility of a recession is growing.

The BTC/USD instrument today established a new local swing low of $9,470 on San Francisco-based Coinbase exchange. The downside price action brought the pair’s week-to-date losses to circa 18 percent. It nevertheless attempted a small recovery above the $10,000, a psychological resistance level during an uptrend, and succeeded. As of 11:25 UTC, the BTC/USD instrument was trading at $10,075.

Bitcoin Price Continues Its Downside Correction | Image Credits: TradingView.com

Bad Day for US Stocks

The bitcoin’s intraday action followed a disappointing day on Wall Street. The S&P 500 index closed the session down 2.9 percent, with energy stocks leading the fall. At the same time, tech-heavy Nasdaq also ended after slipping circa 3 percent on the day.

It was a bad day for treasuries as well. Both the US and UK 10-Year Government Bond Yields plunged below the yields of shorter-maturity debt. It happened for the first time since the 2008-09 economic crisis – their relationship getting inversed rang the bells of a recession.

Meanwhile, Gold prices edged lower slightly on technical grounds. The yellow metal was on a steep rise this week, rising 1 percent in the previous session. The move visibly prompted traders to take near-term profits at new highs. As a result, spot gold was down 0.08 percent at $1,515 per ounce as of 11:36 UTC today.

Doubts Cast Over Bitcoin Safe-Haven Status

The trend conflict between bitcoin and US stocks prompted analysts to question the former’s safe-haven status. Noted economist Alex Krüger pointed today that bitcoin was neither moving in tandem with Gold – a haven-asset with which it tries to compete – nor was providing any hedging solution to investors suffering in the US stock and bond markets.

“Confirmation Bias is the tendency to interpret new evidence as confirmation of one’s existing beliefs,” he added. “Stories that suit one’s bias and generate a warm fuzzy feeling are generally welcome. Facts? Nobody cares about those.”

Peter Schiff, chief executive officer at Connecticut-based broker-dealer Euro Pacific Capital, criticized bitcoin for “collapsing” in the same market environment that promised to catalyze its rise.

“If Bitcoin can’t make a new high with global equity and currency markets in turmoil, under what circumstance will it make a new high,” tweeted Schiff. “So many Bitcoin hodlers are convinced that Bitcoin is going to the moon that they’re afraid to sell any for fear of missing out on huge gains. Yet the price of Bitcoin is plunging anyway. Imagine how much faster the price of Bitcoin will fall once that greed turns to fear!”

The post Bitcoin Slips in Tandem with US Stocks; Still a Safe-Haven? appeared first on NewsBTC.

Suggested Posts