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Bitcoin Shatters Its Correlation to Gold as It Tanks Alongside Equities

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  • Bitcoin’s price has been facing immense sell-side pressure throughout the past couple of days
  • This has mainly resulted from the revelation of multiple bear-favoring news events
  • These events – including the BitMEX imbroglio and President Trump’s health – have led many analysts to expect it to see significantly further downside in the days and weeks ahead
  • They have also caused Bitcoin to break its former correlation with gold and begin, once again, moving in sync with the stock market
  • This trend, should it persist, could hamper Bitcoin and the aggregated crypto market’s growth for the days, weeks, and months ahead

Bitcoin and the aggregated crypto market were struck a lethal blow overnight when stock futures plunged due to news of President Trump being infected with the lethal virus.

That being said, the cryptocurrency has been surprisingly resilient in the face of this bearish news, with bulls being able to stop it from breaking below the support that has been established around $10,400.

This latest decline also came about close on the heels of news surrounding the CFTC’s decision to charge the owners of BitMEX for violating multiple regulations.

That being said, BTC is only down roughly 5% from its recent highs, and is actually showing some subtle signs of technical strength at the moment.

Bitcoin Rebounds from Overnight Lows as Bulls Try to Regain Control

The recent news events that have rocked both the crypto-sphere as well as the traditional markets have undoubtedly been bearish for Bitcoin, but the cryptocurrency’s price hasn’t reacted how many expected it would.

At the time of writing, Bitcoin is trading down less than 1% at its current price of $10,550. This marks a notable rise from recent lows of $10,400 that were set at the bottom of the recent market-wide selloff.

Where the cryptocurrency trends in the mid-term will likely depend somewhat on the stock market, which is currently sinking.

BTC Firmly Breaks Correlation with Gold

One bearish trend that has come about as a result of Bitcoin’s recent price decline has been a firm decoupling with gold as it starts closely tracking the stock market.

While speaking about this trend, one analyst explained that it does not bode well for BTC.

“Gold pumping, BTC dumping on this news. I think, once and for all we can all agree that BTC is not correlated to gold and is correlated to equities, no chopping and changing whenever it suits our bias, this is how it is now,” he noted.

Image Courtesy of SmartContracter. Chart via TradingView.

Whether or not this correlation grows stronger or begins dissolving in the near-term should offer significant insights into Bitcoin’s near-term outlook.

Featured image from Unsplash.
Charts from TradingView.





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Bitcoin

El Salvador to airdrop $30 in Bitcoin to every adult citizen

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The president of El Salvador  has announced the government will airdrop $30 worth of Bitcon (BTC) to every adult citizen of the country.

The announcement was welcomed by Bitcoiners, with influencers speculating El Salvador’s government wil need to purchase the required BTC it intends to distribute adding more than $100 million in buying pressure on markets.

Quickly googled estimates of the adult population of El Salvador varied, with onchain analyst Willy Woo tweeting that Bitcoin’s global user base will grow by 2.5% thanks to the influx of 4.5 million Salvadorians.

Others placed the Salvadoran adult population as high as 6.5 million (which is actually the total population), with Yahoo Finance anchor Zack Guzman using the figure for some rough back of the envelope calculations suggesting that $195 million worth of Bitcoin will be airdropped across the country.

Exact figures are hard to find but Statista shows that in 2019 the population aged 15 and above was 4.72M.

However, crypto Twitter’s euphoria may be be slightly premature, as local publication Prensa Latina notes El Salvador’s citizens will only receive the free Bitcoin after downloading the government-issued cryptocurrency wallet application.

The news was announced during a June 25 press conference, with President Bukele stating the government’s “wallet app will even work anywhere with a cell connection, and you won’t have to have a cell plan for the app.”

President Bukele also stated that the country’s much-celebrated Bitcoin law recognizing BTC as legal currency nationwide will come into effect on September 7.

Related: Opposition poses constitutional challenge to El Salvador’s Bitcoin law

El Salvador’s Bitcoin law was passed roughly two weeks ago. While the move has been praised by the global crypto community, the legislation has faced opposition from a minority political party and the World Bank.