Bitcoin’s role as safe-haven questioned as price falls 50%
European stocks and American stocks bounced back as investors reflected on actions by central banks and governments. In Europe, the CAC, DAX, and Stoxx rose by more than 6% each while in the United States, futures tied to the Dow, Nasdaq, and S&P500 rose by more than 5%. In the United States, the Fed has pumped more than $1.5 trillion in the financial market. Also, democratic and republican negotiators are nearing a rescue package that will help to cushion the economy. In Italy and Spain, regulators have banned short selling while in the UK, the LSE has eased requirements for market makers that trade fixed-income exchange traded funds. This came a day after Christine Lagarde’s ECB announced more quantitative easing measures.
The price of crude oil jumped today as traders cheered the current stimulus coming from governments and central bankers. The price of Brent rose by 6% while that of WTI rose by 5.52% respectively. Still, the price is having its worst week since 2008. In the coming week, we will continue to follow the fallout from the coronavirus pandemic. The markets will also focus on any news from OPEC countries and Russia, as well as keep an eye on the amount of crude oil that the bruised American producers are producing.
Bitcoin proponents have always equated it to gold. They believe that the cryptocurrency is a digital gold, whose value will rise in times of volatility. This has been disproved this week as the price of the crypto has declined by almost 50% in the past two days. The crypto is down by more than 45% in the past 30 days. In the same period, the volatility index has soared by more than 90%. The catastrophic drop was attributed to several factors. There are those Bitcoin investors who are liquidating their assets to fund margin calls on other asset classes. Also, there are those selling as they strategically move to cash holdings.
The EUR/GBP soared to a six-month high of 0.8930. The sterling has declined by more than 8% in the past 30 days alone. The price is above the 14-day and 28-day exponential moving averages on the four-hour chart. It is also above the Ichimoku cloud while the signal line of the MACD has continued to rise. The momentum indicator is above the important level of 100. This is a signal that the price may continue rallying during the American session.
The GBP/USD pair declined to an intraday low of 1.2480, which was the lowest level since October 22 last year. On the daily chart, the price is along the lower line of the Bollinger Bands while the RSI is moving towards the oversold level of 30. The price is slightly below the 61.8% Fibonacci Retracement level, which is a sign that the pair may continue dropping.
The USD/JPY pair rose to an intraday high of 107.53, which was the highest level since Friday last week. The price is between the 50% and 61.8% Fibonacci Retracement level on the hourly chart. The price is also along the upper line of the Bollinger Bands and above the short and medium-term moving averages. The RSI has moved from the oversold level of 14 to the current level of 60. The pair may continue rising to test the 61.8% Fibonacci Retracement level of 108.00.