Equity Markets Turmoil Could Push Bitcoin Below $10K, Say Analysts

Bitcoin risks falling into four figures on a continued sell-off in equities and rebounding U.S. dollar.

Sep 22, 2020 at 11:02 a.m. UTC
Updated Sep 14, 2021 at 9:59 a.m. UTC

Bitcoin (BTC) is once again taking cues from the stock markets and prices may fall below $10,000 if equities see further sell-off, according to analysts.

  • The top cryptocurrency fell by 4.5% on Monday to register its biggest single-day decline since Sept. 4.
  • That came as global stock markets nursed sharp losses and the safe-haven U.S. dollar gained ground on renewed coronavirus fears and uncertainty over the 2020 U.S. election.
  • Bitcoin is currently priced at around $10,460, down nearly 2% on the day, according to CoinDesk's Bitcoin Price Index.
  • "Sustained risk-off in broader equity markets will lead to heavy offers across major cryptocurrencies," Matthew Dibb, Stack Funds' co-founder and COO, told CoinDesk. "Bitcoin may revisit September lows [around $9,870]."
  • European equities are reporting moderate gains at press time, however, futures tied to the S&P 500 index are down 0.3%, signaling scope for extension of Monday's sell-off.
  • Historically, September has been a weak month for the S&P 500 and the index performs poorly in October in the U.S. election years, according to crypto analyst Lark Davis.
  • "As such, bitcoin could be in for some big bumps over the next six weeks," Davis tweeted.
  • A potential recovery in stocks may have a little positive impact on bitcoin, unless it is accompanied by an uptick in precious metals like gold, according to Dibb.
  • "While Nasdaq recovered towards the end of Monday's session, our concern in relation to bitcoin is its heavy correlation with gold and silver, which are trading further down [Tuesday]," he said.
  • The 60-day positive correlation between gold and bitcoin strengthened to record highs earlier this month.
  • Gold is currently trading near $1,900 per ounce, representing a 0.4% decline on the day, and fell nearly 2% on Monday. Meanwhile, silver dropped by 7.6% Monday.

Bicoin and gold daily charts

  • Bitcoin's daily chart (above left) shows a "bear flag" breakdown – a sign the bounce from the recent low of $9,869 has ended and the pullback from August highs above $12,400 has resumed.
  • "The cryptocurrency has breached the horizontal support of $10,500 (February high) and could slip to $10,000," Patrick Heusser, senior cryptocurrency trader at Zurich-based Crypto Broker AG told CoinDesk.
  • Gold's descending triangle breakdown also suggests scope for deeper declines.
  • Dibb is also keeping a close eye on the U.S. dollar index (DXY), which tracks the greenback's value against major currencies.
  • "A breakout of the USD from its two-month consolidation will likely lead to continued selling and pressure on Bitcoin," Dibb said.

Dollar index daily chart

  • The DXY has largely been restricted to a range of 92.00 to 94.00 since the end of July.
  • A move above 94.00 would confirm a breakout and may weigh over bitcoin.
  • Bitcoin's big move from $9,000 to $12,000 seen in the second half of July was accompanied by a broad-based sell-off in the U.S. dollar.
  • Federal Reserve Chair Jerome Powell will testify before the U.S. Congress on Tuesday and is expected to reiterate the central bank's commitment to holding interest rates low for a prolonged period.
  • Since the markets have already priced in low rates, stocks may not see a big relief rally.
The Festival for the Decentralized World
Thursday - Sunday, June 9-12, 2022
Austin, Texas
Save a Seat Now

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
Pierina Merino: Rethinking Social Media for the Metaverse

Meet the 30-year-old Venezuelan founder of FlickPlay, a hot social metaverse platform. Merino will appear at CoinDesk's Consensus festival.

Meet the 30-year-old Venezuelan founder of FlickPlay, a hot social metaverse platform. Merino will appear at CoinDesk's Consensus festival.

2
Former Wyoming Banking Commissioner Goes Web 3

Albert Forkner has joined crypto infrastructure company Fortress Blockchain Technologies.

Albert Forkner has joined crypto infrastructure company Fortress Blockchain Technologies.

3
Voyager Digital Downgraded by Compass Point on Concerns Over Crypto Markets, Retail Investing

The firm now rates the shares at neutral, down from buy.

The firm now rates the shares at neutral, down from buy.

4
ApeCoin Migration Draws Interest From Avalanche, Flow

The Bored Ape Yacht Club-linked ApeCoin DAO is in talks with layer 1 suitors as the project considers a post-Ethereum future.

The Bored Ape Yacht Club-linked ApeCoin DAO is in talks with layer 1 suitors as the project considers a post-Ethereum future.