Bitcoin prices fell on Monday ahead of an election that will set the trend for the rest of the year.
The benchmark cryptocurrency fell 2.7 percent after its best month in more than a year. Futures linked to the BTC / USD pair also fell 1.27 percent, indicating declining institutional interest in the cryptocurrency after venturing into overbought territory last week.
The daily Relative Strength Index of the Bitcoin CME Futures was 76.5 on October 27th. Technically, this was an opposite bearish correction below 70 – a limit that separates the asset from “overbought” to “neutral”.
And that happened after Bitcoin broke over $ 14,000. The level served as an ideal cap for traders to outsource some of their bullish positions for short-term gains. Two bullish rejections later, the price corrected itself to $ 13,356 on Monday.
Bitcoin sees a $ 14,000 sell-off. Source: BTCUSD on TradingView.com
Bitcoin experiences sell-off at $14,000. Source: BTCUSD on TradingView.com
The recent slump in Bitcoin prices was also evident as traditional markets showed signs of recovery from their weekly lows. Futures pegged to the S&P 500, the U.S. benchmark index that has had an irregular positive correlation with Bitcoin since March 2020, rose 1.6 percent on the Monday before trading.
Gold, a hedging tool that competes with Bitcoin, also rose 0.62 percent.
Sean Markowicz, strategist at Schroder Investment Management, told the WSJ that investors are buying assets that were in the red last week.
“We have seen some buybacks, with some investors viewing it as a buying opportunity given the huge sell-off we had last week,” he said.
The upward trend in traditional markets was also evident just a day before the US elections. A new poll in the Wall Street Journal / NBC News found that Joe Biden leads Donald Trump by ten percentage points. Investors hope that a clear win for Mr Biden will pave the way for the second coronavirus aid package. This bill is at a dead end amid failed negotiations between the Republicans and the Democrats.
As previously reported, the presence of a stimulus package for Bitcoin could prove bullish as it would increase downward pressure on the US dollar. The cryptocurrency remains inversely correlated with the greenback, especially since the global market trend in March 2020.
Technical outlook for Bitcoin
AMD Trades, a Twitter-based cryptanalysis channel, noted that Bitcoin may have lost some of its profits to alternative cryptocurrencies. The past 24 hours have mostly seen an increase in the altcoin market, with Ethereum, XRP and other tokens rising versus Bitcoin.
$ btc Maybe we bring the flow of capital into Alts, I’d love to see the BTC pairs show more life. pic.twitter.com/cTXuDuo9tH
– AMD Trades (@Amdtrades) November 2, 2020
That shows something that no capital is flowing out of the cryptocurrency market. Traders are visibly shuffling their Bitcoin funds before the election results.
A pseudonymous day trader expects the Bitcoin price to drop towards USD 11,500.
“If we are to continue the sell-off, I would expect the red box to be seen as resistance given its importance as support for LTF ($ 11,650),” he said. “I want to be a $ 11,500 buyer.”
Bitcoin was trading at $ 13,287 at the time of this writing (1248 UTC).