The historic sell-off of the S&P 500 and other major assets in mid-March was mostly induced by what’s called a “liquidity crunch.” In such an event, asset managers exit volatile or depreciating positions to hold cash and mitigate further losses. This creates a cascade-like effect of selling that is compounded as the market continues churning downwards, especially when deleveraging occurs.
During a liquidity crunch, the prize is the USD. Cash is king. Institutions and large asset managers sell-off virtually anything necessary to remain liquid (holding USD), including bitcoin, during a liquidity crunch. That sell-off is likely the root cause of bitcoin’s 50 percent drop—paired with some over-leveraged positions at an inopportune time.
A surging dollar is actually representative of a deflationary environment, not an inflationary one, so a big question remains, when will the impact of fiscal and monetary stimulus begin to manifest? What’s evident is that central banks and governments are trying to temper any deflationary environment and bitcoin’s shining moment may emerge.
Bitcoin Hits $8K Erasing Coronavirus Crash — 13 Days Till Halving
Bitcoin finally reclaims a price level not seen since before March’s major price crash, cementing its pre-halving bull run.
The move firmly reverses Bitcoin’s crash in mid-March, when the cryptocurrency shed 60% in a day to plumb 15-month lows of $3,600.
At press time, the new levels had yet to cement themselves amid short-term volatility, with highs on exchange Bitstamp of $8,013.
Bitcoin’s latest success follows a sharp uptick of 10% last week, with 50-day and 200-day moving average resistance now conquered.
As Cointelegraph analyst Keith Wareing reported earlier on Wednesday, the next major area in which to gain a foothold lies at around $8,500.
UPDATE: Bitcoin Price Smashes $8.5K Resistance With $1K Gain in 24 Hours – A dramatic day of gains sees BTC/USD rise 12% and cast aside a band of resistance in a matter of hours to pass $8,600.
Bitcoin at $1 million?
In a matter of days, a critical aspect of Bitcoin will be cut in half…
This event has already happened twice in the history of Bitcoin… And both times it caused a massive bull run.
It’s dead certain to take place again… It’s firmly inscribed in Bitcoin’s code.
Insiders predict Bitcoin could rise to $100,000 as a result of this event… Some even say we could see an incredible run to $1 million.
But I urge you not to go and buy Bitcoin before you’ve seen this.
There’s a simpler, safer, and potentially much more lucrative way to play this event. And you can get started with as little as $5.
Right now, most investors don’t know about this strange detail, but word is getting out fast.
You HAVE to position yourself immediately to seize this opportunity for life-changing gains.