Bitcoin price has shed 10% in a single day in an increasingly dangerous macro climate. Although the ultra-scarce cryptocurrency is claimed to be a hedge against catastrophic economic events, there is no telling how the volatile asset could react when it does finally arrive.
With the stock market on shaky ground and precious metals melting down further, is the top cryptocurrency and the rest its altcoin brethren about to experience a bleed out similar to Black Thursday? Or is this just a shakeout using nervous market sentiment over what ends up being a non-event? And which event are we referring to?Bitcoin Price Sheds 10% Alongside Bearish Stock Market Sentiment
The cryptocurrency bull market has been cut short of expectations, causing a consolidation phase and bringing the market to a state of fear.
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As if sentiment wasn’t frightened enough in crypto from the 50% collapse in May, another 20% flash crash weeks ago froze bulls and price action in place. Another try for up over this weekend was promptly rejected with another 10% fall today.
Bitcoin price sank by 10%, but has yet to produce new monthly lows | Source:Are corrections getting smaller, or is there something else going on that could make the 10% only the beginning of something more? A potentially dangerous macro situation could present a mixed situation for the consolidating cryptocurrency.
Dow Jones Dips As Dangerous Macro Storm Brews
Bitcoin price has already recovered more than $1,000 since the bell rang at the official Monday morning market open. The forceful selloff started overnight after the weekly close, potentially due to stock market weakness.
The macro environment is on shaky ground considering a potential catastrophic default of China’s second-largest real estate developer, Evergrande. The default has Lehman Brothers-type implications, enough to cause domino effect and potential economic collapse and recession.
The Dow Jones its looking heavy | Source:could ultimately turn into another scenario where an unprecedented amount of fiat currency is essentially printed to cover the debts the real estate giant can’t cover.
Bailouts were made an example by Satoshi Nakamoto, who called out such an instance in the cryptocurrency’s Genesis Block. “Chancellor on brink of second bailout for banks,” the Times headline reads.
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These bailouts saved the stock market and the economy back then, and the strategy was used again to combat COVID. Can the economy withstand another flood of capital? Or will central banks and governments be forced to step in and let it all come crashing down? Most importantly, how does Bitcoin perform in any of the above scenarios?
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Featured image from iStockPhoto, Charts from TradingView.com
