Holy market whipsaws Batman
This article might deviate slightly in that I am talking about other markets besides cryptocurrencies. Still, too much has happened over the past 24-hours to not talk about the price action moves in some of the most important markets in the world.
Trump killed the Oil market: ‘The US does not need oil from the Middle-East’
Let’s look at the time frame of what happened to oil over the past 24-hours.
Last night, around 1800 EST, Oil spiked. This was one of those weird instances where I was heard about missiles being fired from Iran from some friends in Dubai and Israel – literally within minutes – and it was over an hour before anything showed up on ABC, CBS, or FOX. But when the news did start filtering out, oil spiked (#1 on the chart). Huge spike of +4.67%. Then, as the night went on, we learned that the attack was for show – a face-saving exercise. Markets cooled off and retraced the move. Then, today (January 8th, 2020), President Trump addressed the nation around 1200 EST. During his speech, he talked about the US is the world’s largest oil and natty gas producer… and then he said, ‘we don’t need middle-east oil.’ Bye-bye oil. And it’s still dropping. Currently (1342 EST), oil is down -5.26% from the open. But how far down is it from the overnight missile strike highs? An unbelievable -9.63%. It’s one of the most significant falls I’ve ever seen.
Gold reaches $1,600 an ounce – then collapses
I’m more of a silver guy, but Gold is the defacto risk-off asset out there – and it has been for millennia. Gold had had a decisive run ever since early 2019 when Gold broke out of a six-year consolidation zone. When the news about the missile strikes hit, Gold spiked to $1,611.49. There was a normal retracement, but when it was clear the missile attack was not an actual start to war, gold proceeded to follow oil. It’s currently down -1.14% from the open, but the total retracement from the overnight highs is -3.64%. The volume is equally strong, and if it keeps growing, then we’ll have seen the single largest volume traded day since November 2016.
Bitcoin sells off with other risk-off assets
I’ve written recently about how Bitcoin has been behaving as a risk-off asset as opposed to a risk-on asset. Evidence of this behavior has been the mirrored movement between Gold and Bitcoin over the past five days. If we needed some more proof of this behavior, then today was another example. As Gold and Oil sold-off, Bitcoin has also dropped. From the levels that Bitcoin was trading at before the President’s press conference, Bitcoin is trading roughly -4.25% lower. Bitcoin remains above the $8,000 value area and has been oscillating around yesterday’s resistance level near the 2/8th inner harmonic at 8192.22.
Will Bitcoin continue to drop with other risk-off assets? That remains to be seen. We need to remember that Bitcoin is still a predominantly risk-on asset. And given the critical breakout levels that Bitcoin has broken, we could anticipate Bitcoin resuming a move higher, and some dip buyers could propel the price to the five-digit value areas. Pay close attention to the intra-day behavior that Bitcoin has been exhibiting since January 3rd, 2020. There is a clear difference between the price action after a pump this past week compared to any other time since late June 2019. There are some clear buyers in this market supporting Bitcoin’s price. And with the amount of new, naive retail traders over-leveraging their short positions, we could experience a massive, massive move higher at any moment.