Shortly after appearing that BTC and other cryptocurrencies make a break from traditional financial markets, it looks like we are seeing Bitcoin back in tandem with stock markets. At the end of last week and over the weekend, stock markets and crypto alike went through a considerable downturn. As Monday commenced, both markets staged considerable comebacks. Despite the strong gains, however, it does not look like either market is out of the woods yet.
Impressive Gains for All
A look into some of the world’s most popular assets – crypto and traditional – show positive response to the multi-trillion dollar stimulus package that was signed into law the previous week. Bitcoin, Ethereum, and several other cryptocurrencies showed gains of nearly 10% on Monday while DOW, NASDAQ, and S&P 500 all closed Monday with gains ranging from 3% to nearly 4% while the European FTSE 100 closed at nearly 2% higher than Friday’s close
World stock markets were also up by the end of Monday, marking a strong start to the week. While the stimulus efforts made by governments the world over are likely to have temporary positive impact on prices, things are looking good at the moment.
Bitcoin Back in Tandem
In a similar fashion to stock markets around the world, Bitcoin and other cryptocurrencies underwent extreme selloffs on Friday, pushing prices to new lows. Many analysts speculated that Bitcoin was going to continue its descent, quoting prices as low as the low $4000s. Stock markets also all closed in the red as did virtually all individual stocks.
Interestingly, as soon as the stock markets began to gain some bulllish ground, Bitcoin quickly regained much of its previous losses from the previous week. By the time the US markets closed on Monday, Bitcoin was up nearly 12% for a per coin price of $6536.
For now, it would seem that traditional money markets are going to be indicators of crypto action. The world’s biggest cryptocurrency by far is BTC and will likely fluctuate with similar sentiment with stocks as global financial troubles loom.
Is Bitcoin Heading South?
Should the cryptocurrency markets continue moving alongside stocks, it is likely that Bitcoin and others may be heading south. With no end in sight for the global pandemic, an excess of crude oil with far less demand, and consolidating precious metal prices dominating the current financial realities, a downward trend for stocks and other markets seems quite likely.
Another issue facing asset value is inflation. As countries take action against economic standstill by introducing stimulus packages unlike anything the world has ever seen, many are concerned that the dollar and other major fiat currencies are likely to become dramatically undervalued. In a world where inflation begins to run rampant, Bitcoin could very well bow out from its current position. Whether crypto will, in fact, respond in the ways cryptocurrency experts expect it to is another question entirely. The likelihood is high, however, because when inflation begins to rear its head, many gravitate more predictable assets.