With the stock market going down, Bitcoin is viewed as a safe haven asset. But is this story really important? We have a different factor to focus on.
Bitcoin goes up, the stock market goes down. This is the kind of story we have seen now. And it is an appealing one. In an article on the CNBC website, we read:
Bitcoin soared 9% on Monday, performing like a safe haven asset as it edged past $11,000 for the first time since around mid-July.
The price of the world’s largest cryptocurrency climbed as high as $11,860, according to CoinDesk data, hitting a more than 3-week high. Bitcoin’s value now accounts for nearly 70% of the global crypto market, according to CoinMarketCap.
Global stock markets on the other hand have been sliding lower on the back of renewed trade uncertainty, after President Donald Trump said last week that Washington would impose 10% tariffs on another $300 billion worth of Chinese goods.
The story is appealing because it might mean that Bitcoin is moving in the opposite direction to stocks. In other words, Bitcoin might be reacting as a safe haven. But it is important to remember that this is only one situation. And one situation is definitely to little to proclaim with any certainty that Bitcoin in fact reacts as a safe haven. We would have to see more consistent behavior for such a claim to be supported. While trade wars and problems with stocks have become one of the standard “reasons” for Bitcoin’s positive performance, we remain skeptical of such explanations. But the currency did go up, along with our expectations, and this can be a sign for the currency.
Rebound
On the short-term BitStamp chart, we are seeing the appreciation quite clearly.
The important move here is the very recent appreciation. So far, it has brought Bitcoin to the 2.618 Fibonacci extension, which is not that far from the very recent local top. Bitcoin is very close to the $12,000 level, which is also a psychological barrier. At present, it seems that a move above $12,000 would be the next, but not the most important bullish hint. It is the $12,000-13,000 area that might be critical for Bitcoin, and so a confirmed breakout above the $13,000 level could be a serious bullish indication.
June/July Levels Not Far
On the long-term Bitfinex chart, the appreciation is already pronounced.
The picture we see is one where Bitcoin rebounded from the 61.8% retracement based on the move from around $3,000 to around $20,000. This rebound is now continued and Bitcoin is once again above the 50% retracement. This still is not something to get overly excited about but a hint that the bullish picture has strengthened. From the long-term point of view, the level of the June/July highs is one to observe for potential bullish triggers. If we see a move above this level, we could potentially see another very serious move up. Stay tuned!
Summing up, we have seen a rebound to the upside and important levels are ahead of Bitcoin.
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Thank you.
Regards,
Mike McAra
Bitcoin Trading Strategist
Bitcoin Trading Alerts
