Even though the price of Bitcoin has risen and many traders are anticipating a rise during the Bitcoin halving event, BitMEX CEO Arthur Hayes predicts that it will drop to the $3000 level again.
According to the BitMEX crypto trader digest on 9th April, Hayes mentioned that when the U.S. stock market drops, all asset classes will also be affected, and that will favor the price of Bitcoin making it correct.
According to Hayes, when the stocks plunge, Bitcoin will also be affected. In the short-term, the U.S. stock market is safe since it was given a boost by the Federal Reserve to prevent a market crash. This has led to an increasing interest in stocks in recent weeks.
When we look into history, there is a significant fake-out that is expected by the U.S. stock market. The pandemic has affected all the major industries all over the world. Global manufacturing has been adversely affected, causing a recession in the economy. The stock market and other assets have also been affected, and Bitcoin will not face any exemption.
The Bitcoin price crash to $3600 on 12th March, was mainly experienced by Futures exchanges such as BitMEX, while its value remained above $4000 on spot markets.
What may lead to a lower low in the price of Bitcoin is a significant selloff that will be triggered by a drop in the U.S. stock market.
Currently, the pandemic has brought so much panic as the number of people infected with COVID 19 continues to plunge.
Even though there are efforts to produce the vaccine, it may need up to 12 months to successfully come up with one. Several pharma giants are hopeful of creating a vaccine within eight months.
Some alternative drugs, such as the hydroxychloroquine, have successfully treated some coronavirus patients, but an effective cure is yet to be found.
So far, the U.S. and Europe have successfully set up measures to contain the virus and are working on effective treatments. That means that the situation will improve with time, and that will lead to a positive response to the stock market. When the stock market grows, other assets, including crypto, will also have a positive spillover effect. That makes Hayes predict that the Bitcoin price may reach $20,000 by the end of the year.
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