Looking At The Big Picture For Bitcoin
The price of oil flipped negative for the first time in history. This is a testament to the fact that these are extraordinary times. The reaction that we are currently seeing on the stock market and in the cryptocurrency, market is primarily fueled by preemptive measure to stop the spread of the Coronavirus. This is not about the damage done by the crisis itself just yet. So far, this is mainly about the damage from businesses being affected by lockdowns and such. Pretty soon, we would have this transcend into a major financial crisis that would be unprecedented this time.
As of now, WTI Crude Oil (USOIL) has climbed back above the $10 mark but this is not over yet. The recent reaction was because of the CME Futures contract expiring today. For now, the S&P 500 (SPX) and the cryptocurrency market has not seen a strong reaction to any of this. We can see that BTC/USD declined down to the previously sketched trend line support on our charts and is now ready to bounce up from there. There is still a good chance that we might see Bitcoin rise towards $8.4k-$9k before it begins the next downtrend. However, the risks are becoming bigger and there is no reason to think that what happened to oil yesterday could not happen to Bitcoin.
The commodities market is a much larger market compared to the cryptocurrency market. If WTI Crude Oil (USOIL) can fall to zero and lower, it can certainly happen to Bitcoin because these are not ordinary circumstances. I understand that we have had uptrends and downtrends during Bitcoin before but during all those cycles, one thing was constant and that was the uptrend in stocks. Since the financial crisis of 2008-09, the S&P 500 (SPX) has been in a steady uptrend. This time, all that might change and as we can see extraordinary developments are happening like we just saw with oil and the coronavirus. While BTC/USD may still see some short-term upside, it is important to realize that the risk/reward is definitely not worth chasing it higher at this point.
