It looks like the idea that bitcoin is a “safe haven” of sorts has been challenged this weekend. News of Donald Trump and his hospitalization due to the coronavirus infection has brought an end to the electric surge stocks were experiencing, and as a result, bitcoin is also showing signs of weakness, suggesting that the correlation between the S&P 500 and bitcoin is still there and as strong as ever.
News Regarding Trump Brings Down Stocks… and BTC
For the longest time, many industry experts and analysts have expressed the idea that bitcoin is a form of digital gold. That it can be used the same way gold can (to potentially hedge one’s wealth against inflation and other economic strife). However, it doesn’t look like that narrative is holding up considering the fear that has arisen from the latest news surrounding Trump’s health.
The good news is that the currency is remaining above $10,000, and it’s record in the five-figure range has fallen, but the price is appearing shaky. As it stands, the relative strength index (RSI) of bitcoin reads at a measly 45, while the equity index is at 51, suggesting that the fall of bitcoin has been much harder than anything experienced by the stock market.
The evidence is also there in that bitcoin went as high as $12,400 in late August only to drop about $2,000 rather quickly from there. To compare, the S&P has fallen by roughly six percent since September, while bitcoin has fallen closer to 15 percent.
Meltem Demirors – chief strategy officer of Coin Shares – commented on the situation in a recent interview, explaining:
We need more clarity on the election cycle and additional stimulus to help get things moving again in equities – and in bitcoin. Bitcoin has stayed range-bound despite a slew of positive news, largely because there is not enough inflation due to weak aggregate demand. We need bitcoin’s behavior to match its narrative before we see a breakout.
A second round of stimulus checks appears to be what everyone is leaning on, even President Trump. Is it possible that a whole new batch of checks mailed out to suffering Americans could potentially bring the economy back to form, thereby helping both bitcoin and the stock market?
While awaiting further diagnosis from medical staff, Trump tweeted his disapproval regarding the lack of action from members of Congress regarding the latest stimulus package. While Republicans and Democrats have argued back and forth for some time, little to nothing has been done to ensure the money is sent out to the right people.
On social media, Trump stated:
Our great USA wants and needs stimulus. Work together and get it done. Thank you!
When Is Additional Money Headed Our Way?
In response, Senator Majority Leader Mitch McConnell says that the process has been sped up, and that talks are resuming quickly regarding how best to tackle the issues at hand. He stated:
I think we’re closer to getting an outcome.