Bitcoin continued to decline, while stocks soared as tensions in the Middle East cooled.
The key cryptocurrency index plunged 2.44 percent, setting a new daily low of $ 7,852.58 on Thursday. The move extended Bitcoin’s downside correction by 7.28 percent, as measured by the local $ 8,469.39 swing set up yesterday.
The decline in bitcoin rates deepens as investors return to stocks | Source: TradingView.com, Coinbase
The latest losses have been closely followed by slight positive developments in the ongoing US-Iran conflict. On Wednesday, Donald Trump said that Iran had withdrawn from waging a full war with the US. The president’s press briefing loosened the feeling of Wall Street investors – which was beginning to weigh on perceived asylum assets.
Gold and oil, for example, plunged by more than 2 and 4 percent, respectively, after Trump eased Middle East concerns. In the meantime, Bitcoin followed and recorded a slump in both spot and future.
“Everything is fine”
What has helped investors sustain their risk market bias is also the view that Trump will not go to war in election year. This has further weakened the sentiment in the asylum markets, all of which have already reached their exhaustive tender levels. Bitcoin also tested a crucial level of resistance before retreating.
Everything is fine! Missiles launched from Iran at two military bases located in Iraq. Assessing casualties and damages that are happening now. In the meantime everything is good! We have the most powerful and well-equipped army anywhere in the world, without a doubt! I’ll declare tomorrow morning.
For investors, the latest dip is an opportunity to buy cheaper Bitcoin and make their portfolios more protective against a geopolitical climate. Ilan Solott of Brown Herman Brothers has stated that fund managers are looking for hedge, even gold and Bitcoin are becoming favorites at first glance.
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Mr Solott told FT: “The branch confrontation in the region and cyber space will continue, and we will have to learn to live with the constant risk of a policy mistake that will lead to escalation.
Bitcoin has other opportunities, such as the Federal Reserve’s expanding balance sheet, an uncertain U.S.-China trade deal, as well as a so-called quarrying event that would allegedly make the crypto more scarce than gold.
Notable Bitcoin bias
Traders who typically base their Bitcoin trading strategy on technical indicators think that the latest price breakdown is more related to filling a future gap.
Over the weekend, the Bitcoin futures listed on the CME Stock Exchange left a $ 7,960 price gap. The crypto spot rate tends to fill such empty spaces in the charts, which partly explains why it was fixed below $ 8,000 on Thursday. Notable merchant Michael van de Pope tweeted:
“This reversal would be best + closing the gap in the CME. Exploding upward and I was aiming for $ 9,500 (or $ 11,000 because $ 9,500 is like $ 6,000 -> everyone wants to shorten there -> more fuel).”