The unfortunate correlation between the stock market and the crypto market continues. Today major stock indices crashed worldwide, with the Dow Jones Industrial Average (DJIA) down 700-800 points, and it seems this has something to do with a resurgence of the Coronavirus Pandemic to record highs.
Simultaneously, Bitcoin (BTC) and the rest of the crypto market has slumped, which is a trend that has been seen on previous days when the stock market really got hammered.
Specifically, Bitcoin (BTC) has declined from a resistance level at $11,000 to as low as $10,300. That being said, Bitcoin (BTC) is actually quite resilient considering the bearishness of the day, and the $10,000 long term support level is holding.
Further, if the $10,000 support level holds, Bitcoin (BTC) will likely be able to recover to $11,000 and then possibly $12,000, although it depends on if there are more extremely bearish days on the stock market. Another day or two of the stock market crashing could cause Bitcoin’s (BTC) $10,000 support level to break.
On the other hand, other cryptocurrencies are getting hit hard today. Whereas Bitcoin (BTC) is down 4%, Ethereum (ETH) is down 8%, Polkadot (DOT) is down 12%, Binance Coin (BNB) is down 11%, Chainlink (LINK) is down 14%, Cardano (ADA) is down 11%, Tezos (XTZ) is down 14%, NEO is down 16%, and Cosmos is down 14%.
Also, cryptos associated with Decentralized Finance (DeFi) are receiving the brunt of the bearishness today, with UMA down 21%, Aave down 23%, and Uniswap (UNI) down 13%.
Overall, it seems the cryptocurrencies associated with speculative rallies, especially DeFi related cryptos, are seeing the most losses today as rampant speculation reverses into rampant selling.
Zooming out, all eyes now turn towards the stock market to see if today will be a one-off bearish day, or if the trend will continue for the rest of the week. Crypto traders should watch the stock market closely, since if the stock market stabilizes then the crypto market will easily recover, but if stocks see more really bad days, then the crypto market will likely see more bearish days as well.