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Bitcoin: USD/BTC (BTC=X) Is Still Failing As A Flight To Safety Investment

Bitcoin: USD/BTC (BTC=X) Is Still Failing As A Flight To Safety Investment

Yet again, bitcoin bulls arguing that the popular cryptocurrency is a flight to safety investment during times of stock market weakness have gotten some discouraging feedback during the coronavirus-driven market sell-off. The S&P 500 has experienced one of its sharpest drops in history in the past month, but bitcoin has performed even worse during that time.

There are plenty of reasons for investors to be seeking a safe haven for their cash these days given stocks are tanking and bond yields are at record lows. Unfortunately for bitcoin investors, it seems the market doesn’t see bitcoin as a viable way to preserve value.

In the past month, the SPDR S&P 500 ETF Trust (NYSE: SPY) is down 17%. In that same stretch, the Grayscale Bitcoin Trust (OTC: GBTC) is down 23.9% and the price of bitcoin is down 20.9%. By comparison, the traditional flight to safety trade, gold, is performing well during the stock market sell-off. The SPDR Gold Trust (NYSE: GLD) is up 5.8% in the past month, including another 1% rally on Wednesday morning.

Those arguing for bitcoin being its own asset class would point to the fact that the GBTC has very low correlation to stocks, gold, oil, treasury bonds or even market volatility, according to the table.

Unfortunately, the correlation between bitcoin and the SPY is positive, whereas the correlation between gold and the SPY is negative. In other words, bitcoin prices tend to drop when stock prices drop and gold prices tend to rise when stock prices drop.

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 8,787.04.

The projected upper bound is: 8,360.56.

The projected lower bound is: 6,744.99.

The projected closing price is: 7,552.77.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 21 white candles and 29 black candles for a net of 8 black candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 21.5355. This is not an overbought or oversold reading. The last signal was a sell 5 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 30.04. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 28 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -138.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 10 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 4 period(s) ago.

Rex Takasugi – TD Profile

FOREX BTC= closed down -285.270 at 7,573.980. Volume was 29% below average (neutral) and Bollinger Bands were 63% wider than normal.

Open     High      Low     Close     Volume___
7,896.0008,022.3007,564.7207,573.980 131,118
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 8,415.78 9,212.69 8,631.10
Volatility: 61 56 56
Volume: 322,690 255,057 128,293

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FOREX BTC= is currently 12.2% below its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of BTC= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on BTC= and have had this outlook for the last 20 periods.

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