2020 is a roller coaster year for Bitcoin. Earlier this year, the lockdown caused by the coronavirus pandemic reduced cryptocurrency by nearly 60%. It was followed by an equally positive rebound, prompting its price to skyrocket, and the final price rose by 220%.
It is safe to say that Bitcoin has been profitable so far, and the cryptocurrency is still 50% higher than year-to-date, which is much higher than the number recorded in traditional markets including the US Standard & Poor’s 500 Index.
But entering the fourth quarter of 2020, which is also the last quarter of this year, the Bitcoin market has been struggling to cut its prospects for most of its annual earnings (if not all), which is why cryptocurrency risks may face prices in future trading days Three reasons for the decline.
The uncertainty of U.S. elections
At the end of the third quarter, Bitcoin rose almost simultaneously with US stocks. It seems that cryptocurrency traders are waiting for further clarification on the outcome of the November US presidential election. But even if polls indicate that Democratic contender Joe Biden may be elected president, Donald Trump has undermined such expectations.
The current US President stated that he would not leave the Oval Office quietly because of suspected voter fraud, and investors are convinced of his statement. In order to seek financial safety, they have been selling stocks throughout September 2020. At the same time, despite the extremely active closing of the third quarter, Bitcoin also fell 9% this month.
It is expected in October that even if cryptocurrencies are not bearish, Bitcoin and Wall Street Index will remain volatile. Therefore, as investors switch to holding cash, the cryptocurrency may return to its previous support levels of around $10,400, $10,200, and $10,000. At the same time, traders with long-term prospects can limit the downward momentum by buying BTC at low points.
Increase in financial overdue
Another factor testing Bitcoin and Wall Street bullishness is the increase in non-performing loans in the United States.
The lack of consensus on the second coronavirus stimulus package is a cause of concern for unemployment and small and medium enterprises. As economists expect no more economic stimulus before the presidential election, the market is likely to see an increase in mortgages, loans, credits and leases overdue in the fourth quarter.
This may cause financial stocks, which are the backbone of the US economy, to fall, and as traders begin to shift their profit positions to make up for their losses on Wall Street, their selling behavior may spread in the Bitcoin market, which will prove once again The correlation between Bitcoin and the S&P 500 Index.
The second outbreak of coronavirus
The US market will continue to suffer from the second wave of coronavirus infection risks. Without stimulus measures, investors may be forced to return risky assets, including US dollars and government bonds , following the threat of a new round of business lock-in .
From early February to March, similar sentiments caused the Bitcoin market to plummet. Therefore, unless new aid is provided to the U.S. economy, cryptocurrencies may fall into the coronavirus-led selling sentiment.
Most importantly, stimulus and liquidity can bring Bitcoin back to the cost of $10,000. Traders should pay attention to the development of Congress policy and look for further clues. Before that, there are still downside risks.
The original text comes from bitcoinist, compiled by the Bluemountain Labs team, the English copyright belongs to the original author, please contact the compiler for Chinese reprint.
