Bitcoin Plunges Under $6,000 as S&P 500 Sees Worst Week Since Great Recession

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After a three-day rally from $5,400 to $6,900, Bitcoin has been dealt a significant blow by bears, who just minutes ago pushed the cryptocurrency under $6,000 after the 28% rally that some argued was a precursor to a bull trend. As it stands, BTC trades at $5,800, 16% below the local top.

Although a bearish daily trend hasn’t been confirmed, many have pointed to the rejection at $6,900 as notable, as that level was important for the asset for a number of technical reasons, including the fact it is the monthly volume-weighted average price (VWAP). 

Bitcoin’s strong reversal comes as the Dow Jones and S&P 500 have confirmed their worst trading week since the Great Recession, with both indices posting losses of around 15%, with the Dow hitting 19,000 points.

Bitcoin Far From Bottoming: Analysts

Although the breakout that was seen early Friday was bullish, most are convinced that Bitcoin will take a while to bottom and to mend the technical damage it sustained last week, when it plunged 50% in a 24-hour time span.

According to Bloomberg, market research firm Fundstrat Global Advisors wrote in a recent note that Bitcoin’s price action remains “badly compromised” after the notable drop last week, setting the stage for a longer-term bear trend.

Notably, this compromising of bullish structures took place across all asset classes, the firm wrote. Technical strategist Rob Sluymer explained the concept further:

The crypto breakdown over the past week mirrored the ‘get me out of everything’ panic that dominated all asset classes, whether they were defensive or not. Lower highs and lower lows are in place for Bitcoin, leaving in a compromised, potentially vulnerable longer-term profile.

The analyst — who called Bitcoin’s 2019 breakout — explained further that even if the bottom is in, it will take “months of consolidation to repair the technical damage now in place.”

This was echoed to a T by Vijay Ayyar of crypto exchange Luno, who told Bloomberg that there’s a good likelihood BTC ranges between the key $6,500 resistance and the $3,000 support (that marked 2018’s bottom) before a bull cycle resumes.

Strong Fundamental Case Remains

While there is this overhead technical pressure, Bitcoin’s fundamentals arguably remain decisively bullish.

Per previous reports from NewsBTC, Hunter Horsley, CEO of Bitwise Asset Management, sees a number of reasons why the cryptocurrency remains strong:

  • Bitcoin has started to decouple from traditional markets, proving that it may act as a safe haven in the ongoing crisis.
  • 72% of Coinbase clients are buying BTC, per data from the company itself.
  • The Bitcoin block reward halving is 50 days away.
  • Billions of dollars may return “when levered longs return.”
  • Central banks have printed trillions worth of dollars to stimulate the economy, setting the stage for inflation that may benefit cryptocurrency.
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