Bitcoin has pulled back sharply from 16-month highs reached early Wednesday alongside heightened coronavirus-induced risk aversion in global stock markets.
- At the current price of $12,980, the top cryptocurrency by market value is down over 5% on the day and 7% from the Asian session high of $13,857. That was the highest level since June 2019, according to CoinDesk's Bitcoin Price Index.
- The cryptocurrency looked overbought and vulnerable to minor pullback early today, having rallied by over 20% this month alone.
- However, the pullback's magnitude is likely being amplified by the losses in the global stock markets.
- Wall Street's benchmark equity index S&P 500 is down over 2% at press time, and the pan-European Euro Stoxx 50 index has shed 4%. Meanwhile, the anti-risk sentiment is boding well for haven assets like the U.S. dollar, Japanese yen, and U.S. Treasury bonds.
- The dollar index, which tracks the greenback's value against major currencies, is up over 0.5% at 93.50, while the U.S. 10-year yield is down nearly three basis points.
- However, gold, also a haven asset, is struggling to draw bids and is trading at $1,876, down 1.7% on the day.
- Risk appetite has weakened as the second wave of the coronavirus is accelerating across Europe and in the U.S. and threatening to derail the fragile global economic recovery.
- According to Reuters, France and Germany are preparing to reimpose economically painful lockdown restrictions.
- While the possibility of bitcoin extending losses on continued risk aversion cannot be ruled out, fundamental metrics like the market value to realized value Z-score indicate the broader trend for the cryptocurrency is bullish.
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.