- Global equities moved sharply lower on Thursday on the rise in COVID-19 infection cases
- “Uncertainty across all asset classes likely fueled a short-term drop for BTC,” an analyst said
- Bitcoin buyers failed to clear $10,000 again and rotated lower to trade abelow $9,500
Bitcoin price failed to move above $10,000 again, which caused the price action to rotate lower and return below $9,500. One of the key reasons behind the drop in prices is the correlation with the stock market as U.S. equities recorded one of the worst days since March.
Fundamental analysis: Markets turn lower as the number of infections rises
Global equity markets turned sharply lower on Thursday as the number of infections has continued to rise, hinting the virus may be on the upswing. Cases are rising in nearly half of the United States as authorities gradually ease lockdown measures.
“It is a disaster that spreads. It’s not like there’s an entire continental seismic shift and everyone feels the shaking all at once,” said Dr. Jay Butler, senior official at the U.S. Centers for Disease Control and Prevention.
Investors are now worried that stay-at-home orders may return if cases continue to rise sharply. As a result, the U.S. equities turned lower to record one of the worst days in the last three months.
“Given the magnitude of the rally, it would shock me if we had a one day sell-off and that’s it,” said Morgan Stanley Investment Management’s Andrew Slimmon.
Bitcoin price followed the equities lower, closing the day 6.37% lower. Interestingly, gold prices also declined, repeating the pattern from early March when almost all asset classes lost in value.
“The stock market correction did not necessarily cause BTC to decline. Rather, uncertainty across all asset classes likely fueled a short-term drop for BTC,” said Forbes’ Joseph Young.
Technical analysis: Bulls rejected again
Bitcoin bulls failed once again to clear the resistance around $10,000, further solidifying this level as an important resistance area. Bitcoin tagged the $10,000 mark on Wednesday before rotating lower to eventually touch $9,078 one day later.
The price action now trades between two horizontal levels on the daily chart – $9,000 and $10,500. The descending trend line is also helping the sellers to protect the $10,000 area, which means that a break of this zone would facilitate buying interest in Bitcoin. In this case, the $11,000 mark becomes the first target on the upside.
Bitcoin price failed to move past $10,000 again, which ultimately led to another rotation lower. It seems that the world’s largest digital coin followed the global equities lower, which reacted negatively to the increase in infection cases in the United States and worldwide.