Bitcoin shattered safe-haven status may signal wider institutional adoption

• Experts point out to the reasons for the growing BTC-equity correlation.
• BTC/USD has calmed down after volatile start fo the week.

Safe-haven narrative shattered

In recent months, Bitcoin price has been correlated to equities and acted in tandem with risk assets. The first digital asset dropped in response to coronavirus outbreak and reacted negatively to the worsening global macroeconomic conditions. This development questions Bitcoin status as an uncorrelated asset that can be used as a hedge during turmoil. 

However, according to Denis Vinokurov, head of research at Bequant, a London-based digital asset firm, Bitcoin's correlation with equities has another important implication. 

This is important and it also goes to show how institutionalized crypto market has become, and it also suggests that liquidity crunch in one market may have a contagion impact on other markets.

He further explained that worsening liquidity conditions force market participants to adjust their portfolios and deal with margin calls, which makes alternative assets less attractive. 

BTC/USD settles down in a range

Bitcoin (BTC) is changing hands at $7,940 during early Asian hours. The first digital coin has stayed mostly unchanged both on a day-to-day basis and since the beginning of Tuesday as the market consolidate major losses incurred during the previous trading days. Bitcoin's average trading volume is registered at $44 billion, while its market dominance increased to 63.9%. 

Notably, according to Intotheblock data, 60% of active Bitcoin accounts are in the money at the current BTC price. This is better than 52.24% registered on March 9, when BTC hit the recent low of $7,633. 

Bitcoin's price drop during the last 7 days of 13% led to an even bigger decline of 27% in the number of addresses in the money compared to the previous week, Intotheblock commented.

Currently, over 2 million addresses have their breakeven price on approach to $7,700, which means that this level might serve as strong support. It is closely followed by the recent low of $7,633. Once it is out of the way, the sell-off is likely to gain traction with the next focus on $7,200 reinforced by SMA100 weekly. Bitcoin has been trading above this line since the beginning of January.

On the upside, the initial resistance is created by psychological $8,000. However, a stronger barrier comes at $8,700 with over 3 million addresses that may seek closing out at a breakeven point. This area is reinforced by SMA50 weekly ($8,640). A sustainable move above this resistance will allow for an extended recovery towards $9,000.

BTC/USD weekly chart

---