Bitcoin traded higher ahead of the opening bell in New York on Monday but risked losing its intraday gains on Moderna’s recent announcement.
The tech-savvy pharmaceutical company updated earlier Monday that its experimental coronavirus vaccine is 94.5 percent effective at protecting people from infection. This was the second successful study seven days after Pfizer and its partner BioNTech also showed 90 percent effectiveness in their COVID-19 study.
Bitcoin initially reacted negatively to Pfizer vaccine news on Monday last week as the price fell more than $ 1,000 within hours of the announcement. Even so, the same day, billionaire Stan Druckermiller claimed he owned Bitcoin. His statements offset the aforementioned downside risks.
Bitcoin bounced back later in the day.
A vaccine that effectively cures the coronavirus is set to eliminate the need for social distancing.
Hence, the sectors that rely on close physical interactions – airlines, travel, manufacturing, entertainment, etc. – can return to normal. The global economy has a better chance of recovering faster as long as a shot is available to contain COVID-19.
A working vaccine also allows investors to reduce their appetite for riskier assets. It’s the same reason why Gold, a safe haven competitor to Bitcoin, saw the worst drop in a day on the day Pfizer claimed a successful test. There was no Stan Druckermiller who could save the precious metal.
Bitcoin chart shows its attempts to keep a price floor above USD 16,000. Source: BTCUSD on TradingView.com
Bitcoin is attempting to hold a price floor above $16,000. Source: BTCUSD on TradingView.com
In the meantime, questions remain about the vaccine’s effectiveness, cost, and distribution. The slower it reaches people, the more likely it is that investors will keep their leg in safe havens like gold and bitcoin. The prospect of more government incentives also prompts them to hold speculative assets over unprofitable cash or cash-based alternatives.
The Bitcoin market could correct a decline in the short term as traders prepare their tentative bearish positions against the vaccine outlook. Still, those with a long-term appetite for risk could find the next slump as their opportunity to expand their cryptocurrency holdings.
Technical outlook for Bitcoin
The BTC / USD exchange rate is in an overbought area on its daily chart. This is yet another reason the pair should correct lower values or at least consolidate sideways above $ 16,000. On a four-hour chart, BTC / USD is showing bearish divergence.
Bitcoin is showing bearish divergence on short-term charts. Source: BTCUSD on TradingView.com
Bitcoin shows bearish divergence on short-term charts. Source: BTCUSD on TradingView.com
In addition to the basics and technical data mentioned above, this leads to a downward correction. However, according to Konstantin Anissimov, Executive Director at CEX.IO, the next big bearish step may still take two to three weeks. Excerpts from his statement to NewsBTC:
“From a technical point of view, BTC appears to be prepared for higher highs. The sequential indicator Tom Demark (TD) suggests that the cryptocurrency may rise for another two to three weeks before a sell signal appears. In that case, Bitcoin could rise to $ 19,000. ”
Bitcoin was trading at $ 16,320 at press time, up more than 2 percent from the Monday session.