Bitcoin Market Update: Why Bitcoin lost as US and UK stocks shined?
|- Bitcoin caves amid the improving stock market in both the United States and the United Kingdom.
- The latest developments from Washington eases the trade tension between the US and China.
Bitcoin has been caught in an ending vicious cycle of short term recovery, followed by a period of consolidation and finally a price drops. This cycle started after hitting a dead-end of around $13,800 in June. The latest consolidation above $7,000, as reported yesterday, appears to have been the brewing ground for the fall that almost touched $6,800.
The United States-China trade tension
The trade dispute between China and the United States was on several occasions seen as a propellant for a number of short term Bitcoin rallies in the past few months. Gold has been a naturally accepted a haven for hedging against deteriorating stock and financial markets around the world. However, Bitcoin, bestowed as the ‘digital gold’ continues to come out as the next asset preferred for hedging.
On the other hand, Bitcoin appears to be losing its growing haven asset status amid improving trade ties between China and the US. The decision by Washington on December 14, not slap another tariff on the $120 billion Chinese goods has greatly started to ease the trade tension between the two giant economies. In return, China accepted to buy at least $40 billion of the agricultural goods produced by the US.
The stock market
The easing tension between China and the US coupled with the win Boris Johnson conservative party got in the United Kingdom Parliament has seen a positive reaction in the stock markets. A Brexit deal also becoming a possibility and that is strengthening the markets even further.
For instance, US S&P 500 index hit a record high on December 12. Other stocks that performed extremely well included Dow Jones and Nasdaq Composite, which shot to new yearly highs on December 13.
Bitcoin’s sad picture
Bitcoin has failed to rally to new 2019 highs even with impressive developments such as the launch of Bakkt physically-settled futures, and China’s President Xi Jinping’s positive comments on the blockchain technology.
In retrospect, the technical picture looks drab and Bitcoin continues to inch closer to November low around $6,530. Technical indicators like the RSI are oversold but ignored. Besides, the target on the downside remains at $6,000.
BTC/USD 4-hour chart
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