Bitcoin prices fell Monday as researchers in the UK discovered a new coronavirus strain that spreads infection at a 70 percent faster rate, leaving traders and investors worried about the global economic recovery.
The flagship cryptocurrency was down 2.74 percent to $22,873 ahead of the New York closing bell. But it fell to as low as $21,913 during the London session, drawing evidence from lower risk appetite across Europe. Their pan-continent Stoxx Europe 600 slumped 2.3 percent after several countries barred travelers from Britain to keep the new coronavirus infection away.
The US session saw Bitcoin paring a portion of its intraday losses. Nevertheless, the cryptocurrency remained far from closing the day in positive territory, further attesting that it is trading under the macro fundamentals’ influence.
Upside Sentiments Intact
Bitcoin passed the $20,000-milestone last week. Bids for the cryptocurrency kept getting higher heading into the weekend as it formed a new record high at $24,300 (data from Coinbase). Some analysts also noted that its downside correction on Monday came in the wake of profit-taking by daytraders.
“Feels like there [are] so many narratives today for the Bitcoin dump,” stated independent analyst Loma. “Sell the stimulus news; Mutated COVID strand; Simply at resistance and needs a 30% correction.”
“Yeah, I think I’ll keep buying dips at support in a massive uptrend,” he added.
The on-chain fundamentals further hinted that Bitcoin is merely undergoing a short-term price correction before it continues its uptrend.
Leisl Eichholz, an analyst at Glassnode Insights — a data analytics platform, stated that Bitcoin’s Reserve Risk is low, which means it still has an attractive risk/reward. Excerpts:
“When Reserve Risk was at similarly low levels during the 2017 bull run, the price of bitcoin was still under $2,000 and saw a 923% increase before the top. If BTC were to follow this same trend in the current market, it would translate to a market top of almost $220,000.”
Bitcoin Difficulty Ribbon
Meanwhile, on-chain analyst Willy Woo referred to Bitcoin Difficulty Ribbon and came up with a bullish conclusion. In retrospect, Bitcoin Difficult Ribbon is an indicator that tracks the cryptocurrency’s network’s mining hash power to determine whether it is contracting and expanding.
Mr. Woo said the Bitcoin’s bull run to its record high coincided with ribbon’s contraction. That gives the cryptocurrency three more months to continue its uptrend as the ribbon switches to the “expansion” mode.