The fear of coming second wave of COVID-19 has caused investors to draw their money back from the markets. Not only traditional markets suffer today from the selling pressure, but the digital assets markets also become the victim of negative sentiments in the traditional markets. Both traditional and digital markets once again coupled after the passing of a few months.
The main reason behind the market slump is basically the fears of Coronavirus second wave. With each passing day, China is reporting new locally transmitted Coronavirus cases.
Has the Second Wave Began?
In an interview with CNBC, Dr. William Schaffner of the Vanderbilt University School of Medicine said in the show, Street Signs Asia, that people are not seriously following the safety measures, which are very necessary to contain the Coronavirus:
“I think the second wave has begun…We’re opening up across the country, but many, many people are not social distancing, many are not wearing their masks.”
China eased down the lockdown when they noticed that cases had been wiped out totally. Due to foreign transport inflow, the virus again stepped into the country as BBC reported, “36 new locally-transmitted coronavirus cases, amid fears of a second wave in the Chinese capital.”
On June 13, the chief strategy officer at the blockchain analytics firm, CryptoQuant, said that Bitcoin behaved accordingly as the US stocks moved downward.
🚨 $BTC crashed as the US stock has tumbled from 15 June, 02:00 UTC.
— Mason Jang (@mason_jang) June 15, 2020
Another crypto analyst, @MattDavidKaye, took to Twitter on June 13 and claimed that the correlation between BTC and traditional returned again. He said:
“S&P500 BTC short term correlation is back. meaning TA is even less helpful here.
Crypto market sentiment should be gauged outside of S&P hours.
I’d like to know who the algos enforcing this tick for tick correlation are. Remember this started with 20 $5MM market sells on Mex.”
Today, he also shared his analysis for Bitcoin and proposed that the price may touch mid $8k or may go lower than this.
We did not see the melt up that I wanted to see over the weekend. Hedged going into this period of uncertainty. Keep an eye on DeFi.
We've lost the Schiff and Modified Schiff pitchforks.
The Gaussian Channel trade is on. mid $8k's or lower are possible.
Thread over. pic.twitter.com/PS1Gzn6YIt
— Matt 🧐 (@MattDavidKaye) June 15, 2020
However, Bitcoin has recovered itself to some extent after the sudden downfall in parallel to traditional indices futures.
There are many chances that the second wave of COVID-19 may start soon. And in case of an extreme health crisis, the financial crisis can put the price direction downward.