The majority of all financial assets, both traditional and digital, have demonstrated a significant decline since the beginning of the massive COVID-19 pandemic. As to cryptocurrencies, Bitcoin and Ethereum were among the outsiders, both top digital currencies turned out to be the most unprofitable virtual assets during the coronavirus pandemic.
According to comparative statistics on the return on various financial assets during the period from February 19 to March 30, Crude oil has demonstrated the worst performance (a drop of 62%), followed by Ethereum in terms of loss (-49.4%), Bitcoin dropdown was -34.7%.
The last time oil fell so low more than 18 years ago.
The only asset that has shown an increase in value, although it has been insignificant (0.3%), was gold. The biotechnology was the most successful investment sector, and energy and finance have been the outsiders.
On April 02, 2020 the Bitcoin's price managed to test the resistance level at $6800 and at some point Bitcoin’s price even reached $7300. But the first cryptocurrency buyers couldn’t manage to fix support level above $7000. In traditional markets, the optimism was triggered by expectations of rising oil prices after information on negotiations to reduce production. But the warring parties in the person of Saudi Arabia and Russia have not yet reached an agreement. At the same time, it is vital to understand that oil cannot grow amid global quarantine and the associated decline in demand. The S&P 500 index closed above 2500 on March 26.
The correlation of Bitcoin with the S&P 500 index goes in to decline. On April 1, Bitcoin managed to move to growth, despite the S&P 500 index negative dynamics. It is expected that the collection will become reverse soon. This can happen after the release of financial statements for the first and second quarters, when companies from the S&P 500 index reveal the real damage caused by the COVID-19 pandemic and the quarantine related to it.
Bitcoin waits for no reports. Its growth will be determined by inflation after pouring trillions of dollars into globally falling economies. In the medium term, Bitcoin’s consolidation above the resistance level at $7000 is expected, and after that a slow rise to $8000 level, followed by FOMO. The immediate goal is the consolidation just above $7000 level. This can happen in the case of a favorable external background, primarily positive for oil and the stock market, there is a correlation in the S&P 500, it decreases in the fall. If the negative scenario plays in the stock market, which is more likely, then bitcoin will stay in the $6200 - $6800 range. Its price in this case will tend to the lower limit of the interval.
What do the charts say?
As it has been expected, fixing above the $6300 support level made it possible for Bitcoin to fulfill the first growth goals with an insignificant margin of error, $7198 instead of $7300. It has happened somewhat faster than it might be expected. On the 4-hour timeframe, the candle closure worries traders, which set the previous day’s high at $7198. The rollback was sharp, and even at high trading volumes. Bitcoin price failed to gain a support level above $7000.
To continue the upward movement, Bitcoin’s price has to to stay above the important range of $6436-$6550, which is both normal support level with accumulation and dynamic confirmation of the trend.
Correction from current values to the $6436-6550 range is still possible. While the support level is at $6550, the upward movement may continue. The previous day's maximum at $7198 fell exactly in the middle of the border of the rising channel, which confirms the hypothesis of the trend forming. If the upward movement continues, the next target is at $7750 level.
The breakdown of $6550 level and consolidation below $6436 will be the cancellation of this scenario. This will force a review of the markup and a search of alternative scenarios.