Virtual currencies, including Bitcoin (BTC), could continue moving downwards in the coming days and weels if the sell-off in traditional markets continue. During the last few weeks, digital assets and traditional markets have experienced a volatile period. Bitcoin, for example, plummeted from $10,500 to $3,800.
Will Cryptocurrencies Remain Stable?
The entire financial system has been severely affected by the current Coronavirus outbreak. Companies are not sure about future economic prospects and which are going to be the effects of the virus on the world economy.
During the last weeks, Bitcoin experienced a sell-off that pushed its price down to $3,800. Now it is being traded close to $6,000. However, Peter Brandt, a recognized chartist and technical analyst, considers that we may be close to a new price drop in digital assets, specifically in Bitcoin.
He shared on Twitter a chart with Tuur Demeester in which he shows how BTC price is forming a bear flag that could break downwards. Tuur Demeester mentioned that he is not worried about the current situation in the market and that Bitcoin proved to be “extremely stable.”
Will you change your mind (short-term at least) if chart completes a bear flag? pic.twitter.com/tqBTiPXWZw
— Peter Brandt (@PeterLBrandt) March 22, 2020
In addition to it, Tuur Demeester mentioned that the market has been entirely affected by a liquidity crisis. This is why Bitcoin behaved as a risk-on asset. Investors needed liquidity in USD and left risk assets, including financial markets and digital assets.
However, things could change in the future if people realize that their money is losing value and turns into Bitcoin and digital assets massively. Emerging market economies all over the world have seen their currencies devaluate in recent days against the USD. That means that there are investors and individuals moving from local fiat currencies to the USD.
If the trend changes and people decides to place their funds in Bitcoin and cryptocurrencies, the price of BTC could decouple from the negative sentiment in traditional markets and start growing once again. It is worth mentioning that Bitcoin was created in the middle of the 2008 financial crisis and has been operating since then without stopping.
According to CoinMarketCap, Bitcoin is now being traded around $5,940 and it has a market capitalization of $108.54 billion. Other digital assets are losing part of their price in the last 24 hours. Nonetheless, things could get better if Tuur’s theory ends playing out.