Bitcoin Volume Gains Traction After 24-Hour Roller-Coaster Ride

By March 16, 2020Altcoins
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Bitcoin Volume Gains Traction After 24-Hour Roller-Coaster Ride

Bitcoin prices have been on a roller-coaster ride since Sunday afternoon after the Federal Reserve slashed rates a full percentage point to the vicinity of 0 percent and promised to pump $700 billion into the U.S. economy. After initially rising on the news and then falling, the cryptocurrency’s buying volumes have picked up.

It’s been an active 24 hours.

The central bank’s drastic measures, taken to offset possible effects of the coronavirus on the U.S. and global economy, included its fourth trip to the quantitative easing (QE) well. However, this action of buying Treasurys and mortgage debt spooked an already nervous stock market, prompting major sell-offs in equity markets all over the world.

Trading in futures contracts on the Dow Jones Industrial Average were briefly halted Sunday evening when their decline triggered circuit breakers. Japan’s Nikkei 225 Index also had more sellers than buyers.

Meanwhile, bitcoin’s (BTC) reaction showed its traders didn’t know how to take the news. The cryptocurrency initially soared about 8 percent in the hour after Sunday’s emergency meeting and announcement. Then the world’s leading cryptocurrency continued higher, trading as high as $5,990 that night on exchanges including Coinbase. Yet, the rally was short. By Monday morning, bitcoin came close to sinking below $4,500 on some exchanges.

Since bitcoin’s drop, buying volumes have picked up, and it changed hands around $5,069 as of 18:00 UTC (2 p.m. ET), down 4 percent in the past 24 hours.

The S&P 500 was also down as of 18:00 UTC, off by 9 percent after automatic trading curbs went into effect. It’s a stark change from the rally that took place in the last hour of trading before the U.S. markets’ close on March 13 when President Trump declared a state of emergency on the coronavirus.

For a brief period, gold lost its shine as traders hit the sell button on the yellow metal at around 10:00 UTC on Monday, but bullion recovered just as bitcoin was selling off.

“Gold is finding footing today so I’m turning pretty bullish short term,” said Jack Tan of Kronos Research, a Taipei, Taiwan-based trading firm.

After hovering in the $4,600 to $5,900 range for much of the March 14 weekend prior to the Fed news, traders are now looking at that $5,000 area again as a place to buy bitcoin

“Seems like bitcoin is finding support around the $5,000 level. I have purchased around these levels,” added Tan.

A $5,000 price level for bitcoin brings with it some doubt for cryptocurrency miners. That’s because it creates greater uncertainty about mining farms’ profitability. However, Denis Vinokourov, head of research for London-based digital asset firm Bequant, thinks the mining industry, a linchpin in securing the Bitcoin network, remains strong.

“While (uncertainty) may be true for smaller farms, the mining ecosystem as a whole remains strong and as secure as ever. More so, apart from anecdotal evidence, there are yet to be any concrete signs of a slump in the hashrate dedicated to mining bitcoin,” Vinokourov noted.

Notable performance in other crypto assets over the past 24-hours include IOTA (IOTA) down 13 percent, decred (DCR) in the red 12 percent and ether (ETH) sliding 8 percent.

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