In this segment, we will analyze the price action of Bitcoin in April 2020. This bitcoin price analysis for April 2020 will include a correlation with the global phenomenon of the coronavirus. We will also assess how traditional markets have been affected by this pandemic.
What a month for crypto space and the rest of the markets! Uncertainty leads the main headlines, and there is no consensus on short and medium-term expectations.
To bring clarity to our readers, we will focus on a purely technical analysis of the cryptocurrency market. We will provide an objective perspective on the price of bitcoin in April 2020.
Recently, many exchanges and brokers were affected by the sudden drop in the bitcoin price. Many platforms collapsed from a wave of panic selling that occurred for a few minutes.
It was similar to the famous “Black Monday” in 1987. On that day, central communication systems failed, and brokers on Wall Street were forced to close trades. The large volume of trading left many clients out of the market for hours. Besides, countless transfers were left on standby, further aggravating the general confusion.
At the time of writing (April 7, 2020) and after recently hitting the lows around $4,000 for just a few minutes, bitcoin had an impressive recovery of almost 100% during March and so far in April.
Due to the huge blow caused by the coronavirus, many cryptocurrencies traders were forced to liquidate their assets and hedge against the market. This action generated a wave of short sales and liquidations of positions in Bitcoin. This caused a sharp drop in the price of bitcoin in less than two weeks.
As tools for this analysis, we will continue to use daily, weekly, and monthly time frames. This will provide us with a macro perspective suitable for both swing traders and investors looking for long term market exposure.
Let’s start by analyzing the monthly chart. For a macro perspective of the bitcoin price analysis for April 2020, we will use this timeframe.
Bitcoin closed the month of March above $6,400. This range acts technically as a support for the digital asset.
The monthly time frame is showing us a very clear picture where bulls (🐂) confirm the importance of keeping monthly closures above $6.XXX. This level was the lowest point of the price during November and December 2019 (~$6,400). It acted as a support before bitcoin started its short-lived rally in January 2020 to almost $10,000.
The $9,300-$9,600 range will remain as the most critical resistance block in this time frame. At this point, there is a massive confluence of key technical levels.
Exceeding this range will be essential for the bulls (🐂). In previous reports, we have discussed several times the importance of having monthly closures above this zone.
Next, let’s take a look at the weekly chart, assessing how the bitcoin price developed during March, after a considerable drop. This is reflected in the monthly chart in the form of a wick.
We can note a weekly closure above ~$5,300 just after bitcoin dropped below $6,XXX, taking it for a few moments to the $4,000 zone.
For this report, we used as reference the price of Bitstamp, where the price was close to $3,850; in other exchanges, this drop was even more violent, reaching $3,600.
Interestingly, a week after that event, bitcoin would play its annual opening again ($7,160), with an 85% increase. This left many market participants impressed by the speed at which the price recovered.
At the time of writing, bitcoin is above the annual opening (~$7,160). It seems trying to revisit the beginning of the bearish momentum it had during March (around $8,000-$8,400).
In the previous report, we discussed how these ranges weresignificant for a precise bitcoin price analysis for April 2020.
In the daily chart, we zoom in on the dramatic drop in the bitcoin price a few weeks ago.
After losing its support at $7,600, Bitcoin fell from $8,000 to $4,800, in just 24 hours.
This type of movement is primarily credited to the macroeconomic conditions generated by the Covid-19 and its effects on many investment instruments around the world, including Bitcoin itself.
Specifically, the price of bitcoin fell by 40% on March 12, making it one of the most volatile days in the history of digital assets.
The questions that all traders are asking are: Are we witnessing a V-shaped bounce to continue the search for previous highs? Is Bitcoin creating liquidity in this ‘dead cat bounce‘ and simply revisiting the area where he started his downward momentum at $7,600 and then falling back to his lows? This remains to be seen.
Funding has been favoring the bulls (🐂) for the last 4 weeks, helping them cross the annual opening barrier and the $7,000 block that acted as a resistance.
Finally, let’s analyze some financial instruments of the traditional stock market and their correlation with the fall of the Bitcoin price.
Usually, there is little correlation between these markets, and they tend to trade completely separately from each other.
However, due to the global magnitude of the coronavirus pandemic, we see very similar movements overall. In part, the expectations generated by Covid-19 keep investors in different markets in a similarly cautious state.
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In the following chart, we will first have the price of Bitcoin compared to the rest of the stock market indices.
The first thing we can notice was the date when they started to show signs of weakness around February 18. However, real sell-off would happen during the first weeks of March. Falls of more than 40% in European markets forced extraordinary decisions to be taken. Financial and regulatory institutions set limits to prevent massive short selling.
These indexes follow the leading companies in America and Europe. They give us an insight into what is happening in the global economy.
While the stock market began to plunge at the end of February, bitcoin followed at a faster pace (as it usually does).
In this period, digital assets experienced one of their worst months since November 2018.
The volatility of the movements started to increase in the first week of March. By this time, the coronavirus was spreading violently outside Wuhan, China, the epicenter of the virus. This factor fueled fears of a global recession.
The recovery of the bitcoin price has been a relief for cryptocurrency investors amidst great turmoil in the financial market. The massive sale of assets caused by the coronavirus triggered a global race for cash. A large number of macro-investors were forced to “sell everything”, from stocks and precious metals to bitcoins.
* The tickers used in the graphics in this report are BTCUSD and ETHUSD, from Bitstamp.
Disclaimer: We remind our readers that all the publications in this blog are informative and should not be considered as investment advice for any reason. The data contained in this cryptocurrency pricing page is not necessarily real time or accurate. Therefore, the prices offered are indicative and not appropriate to operate.
Bitcaribe is not responsible for any loss or impairment caused as a result of the confidence in the information contained in this blog, including data, quotes, graphics and buy/sell signals. Please inform yourself fully of the risks and costs associated with operating in the financial markets.