The global economy does not seem to be doing well at the moment, especially with countries like the UK, France and Spain imposing more and more cross-border restrictions, making the economic outlook for many local business owners even bleak. …
In terms of cryptoeconomics, Bitcoin (BTC) fell nearly 6.5% on September 21st to $ 10,300 after surviving around $ 11,000 for several weeks. What’s interesting this time around, however, is that the mainstream cryptocurrency fell at the same time as gold and the S&P 500.
From a technical standpoint, a quick look at the Cboe Volatility Index reveals that the implicit volatility of the S&P 500 in the above time window has increased significantly and for the first time in more than two months has exceeded the $ 30 level, which has received many commentators expecting another crash similar to March …
It should be noted that the $ 30 sign represents the upper limit for shocking events in the world, such as wars or terrorist attacks. Otherwise, during periods of normal market activity, the index remains around $ 20.
As for gold, the price of the precious metal also fell significantly, reaching its lowest level in two months, while silver experienced its largest price drop in nine years. Falling interest in gold has led speculators to believe that people are again looking at the US dollar as a safe financial haven, especially as the dollar index has maintained relatively strong positions against other major currencies such as the Japanese yen and the Swiss franc. and euros.
Speaking of Europe, the continent as a whole is currently facing a potential economic crisis, with many countries facing the imminent threat of a severe recession due to uncertain market conditions fueled by concerns over COVID-19.
Is there more to this than meets the eye?
While there was a clear connection in the price movements of the cryptocurrency, gold and S&P 500 markets, Joel Edgerton, head of cryptocurrency exchange bitFlyer, emphasized in a conversation with Cointelegraph that when comparing it to other assets such as precious metals, stock options, etc. … – Crypto has shown much more volatility.
In particular, he indicated that the BTC / USD pair was sensitive to movements in the US dollar, as well as to any discussions regarding a potential change in the Fed’s strategy to stimulate national inflation above the 2% mark. Edgerton added:
“Price movement is mainly driven by institutional activity as retail customers continue to buy, falling and accumulating assets. The main thing to look out for is the potential impact of the US elections and the change in the Fed’s response from the current very accommodating attitude to a more natural one. ”
Finally, he saw that any changes in US tax law could also have a direct impact on the cryptocurrency market, especially as various states as well as the federal government continue to seek new tax methods to offset the stimulus packages imposed by the Federal government. Reserve earlier than this. Year.
Sam Tabar, former CEO of Bank of America Asia Pacific and co-founder of Fluidity, the company behind peer-to-peer trading platform Airswap, believes that cryptocurrency as an asset class continues to be misunderstood and misunderstood: over time, people will become increasingly aware area of digital assets, and this development will reduce its connection with traditional markets. ”
Could Bitcoin Bounce Back?
As part of the recent downturn, Bitcoin stalled at around $ 10,300, pushing currency sentiment on social media to its lowest level in 24 months. However, contrary to popular belief, according to data released by cryptanalyst firm Santiment, BTC tends to see a big boom as online emotions – fear, insecurity, and suspicion – circulate around the R&D zone.
The company said this negative online sentiment trend, seen since early September, is not only valid for Bitcoin, but Ether (ETH) as well as some other digital currencies. “In general, the best opportunities to buy cryptocurrencies appear when the average trader fails, both psychologically and financially. This is what our calculations currently show, ”she said.
Generally, Internet Sentiment is calculated for any cryptocurrency by collecting social media datasets associated with the respective currency. This information is then processed using various machine learning protocols to sort the data into positive or negative. Some analytics providers also use a calculation called Realized Market Value or MVRV, which calculates the average profit and loss for different properties.