Bitcoin jumped Monday, with its prices claiming another year-to-date high even as positive results from another COVID-19 vaccine trial threatened to put risk-off assets under downside risks.
The BTC/USD exchange rate topped for the year at $16,660 in the early New York trading, bring itself in a striking distance of its all-time high near $20,000. Elsewhere in the cryptocurrency market, altcoins, including Ethereum, Litecoin, and Chainlink, also reported attractive intraday gains.
The upside moves came after biotech group Moderna announced that its experimental coronavirus drug returned 94.5 percent success results at the trial stage. That made it the second vaccine to deliver positive results in the last seven days. Earlier, Pfizer and its partner BioNTech had announced similar results.
We just announced that mRNA-1273, our COVID-19 vaccine candidate, has met its primary efficacy endpoint in the first interim analysis of the Phase 3 COVE study.
Read more: https://t.co/vYWEy8CKCv pic.twitter.com/YuLubU1tlx
— Moderna (@moderna_tx) November 16, 2020
Ideally, safe-haven assets like Bitcoin should plunge on positive vaccine news. The prospects of a coronavirus cure decrease investors’ appetite for anti-inflation instruments. They expect a faster-than-expected economic recovery and, in turn, increase their exposure in risk-on markets.
But many analysts agree that the economic damage caused by the coronavirus pandemic would take more time to recover. Bart Melek, head of commodity strategies at TD Securities, told CNBC:
“Vaccine or no vaccine we’re going to continue to have a hard time economically well into the third quarter of next year, we’re going to need massive amounts of monetary stimulus and we’re very likely to get fiscal stimulus, which ultimately should help move inflation closer to target.”
That partially explains why traders did not sell Bitcoin on the vaccine news. The flagship cryptocurrency has emerged profitable in 2020 against the global inflationary outlook. It is trading more than 250 percent higher from its mid-March nadir below $4,000.
Bitcoin Correction Expected
Meanwhile, the Bitcoin market’s relentless growth is leaving the asset overbought and completely deviated from its real-time momentum. For instance, analyst Jonny Moe spotted Bitcoin’s price and oscillator moving in opposite directions, giving rise to the possibility of “bearish divergence.’
— Jonny Moe (@JonnyMoeTrades) November 16, 2020
The divergence indicates underlying weakness. It shows that bulls are getting exhausted, leading to a possible trend direction change from an uptrend to a downtrend.
“Since the crowd’s wisdom is usually wrong, the overall market sentiment is something to be concerned about,” Konstantin Anissimov, Executive Director at CEX.IO, told BlocDesk.
“It is imperative to employ a solid risk management strategy to avoid potential losses in a sudden correction,” he added.
Bitcoin was correcting lower after testing $16,600 at press time.