The price of the leading cryptocurrency, bitcoin, dropped to $7,677 during early Asian trade on Tuesday. It is expected that the price of bitcoin would target technical support levels between $7,300-$7,500 as it extends bearish correction. The price of bitcoin saw a bearish correction after the US stocks hit a new seven-week high as states, including Florida, moved towards reopening their economies.
Bitcoin moves opposite of US stock markets.
The drop in the price of bitcoin was the first sign of a correlation-break between Bitcoin and US stock markets. The two have been moving in sync since March 2020, with bitcoin assuming the role of safe haven in the midst of the Coronavirus-led economic crisis. The cryptocurrency saw some pressure from robustness in stocks on 28th April. As bitcoin broke its short-term correlation with US equities, the leading crypto reinstated one with Gold, its top safe-haven rival.
The cryptocurrency’s correction on Tuesday followed similar moves in the gold market. The XAU/USD exchange rate fell 1% to close below $1,700 an ounce during early Asian trade on Tuesday. It was the third consecutive day for Gold in the red zone.
Bitcoin expected to remain bearish as investors likely to withdraw near-term cash profits.
Keeping in mind the current situation, investors could use Bitcoin to withdraw near-term cash profits. Bitcoin is sitting at 100% gains after crashing to $3,800 earlier in March. A drop in the US stock markets could trigger investors to liquidate their profitable positions in both Bitcoin and Gold markets to cover their losses elsewhere. The upcoming halvening event of bitcoin is expected to move the price of the leading cryptocurrency towards $8,000.
Mike McGlone, the senior commodity strategist at Bloomberg Intelligence, said that in this tumultuous year, Bitcoin is gaining accolades as a stabilizing and maturing store of value, and it is more likely to continue appreciating along with the yellow metal market. He further noted that Bitcoin’s volatility is lower than the world’s most important commodity, crude oil, and the lowest ever vs. the S&P 500.