Bitcoin (BTC) seems to be on the verge of a major downtrend. The daily chart for BTC/USD shows that the price has run into resistance at the key 61.8% fib retracement level and now risks a decline below the rising wedge. Bullish euphoria can be seen in the market as investors look for a rally to the moon before the upcoming halving. Meanwhile, the Coronavirus situation in China seems to be worsening as the outbreak is spreading to other parts of the world. There is a total of 64,456 cases now worldwide which have so far claimed 1,384 lives. This situation seems to be underreported by the media as videos and pictures circulating on social media forums show how it has crippled day to day activities in many parts of China.
The reason it is so important to discuss beyond its medical implications is its economic implications. China is the largest export hub in the world and countries like the United States rely heavily on Chinese goods. From big tech giants like Apple to small companies, the Chinese market is what most have been using for more than a decade now to source products. As the situation worsens, it will become increasingly difficult for people to work. The impact has not been priced into the stock market just yet. Quantitative easing is not going to save the market this time around. The S&P 500 (SPX) and other major indices already indicate that the market is primed for a correction at this point.
Bitcoin dominance (BTC.D) has declined to a key support level which it is not likely to break below. A break below this support may trigger a downtrend that would only have to correspond to the beginning of an altcoin season. At this point, in light of the outlook of the stock market, the forex market as well as Bitcoin’s own outlook, we are unlikely to see a bullish reversal in the cryptocurrency market.
Recent moves in the market have exposed the level of manipulation once again. A lot of people in this market with a vested interested would say that there is manipulation in every market. While that is certainly true, there is levels of manipulation and the kind of manipulation here is worse than that in the penny stocks market. My only concern is that as long as this is happening, most investors from traditional markets are not ready to believe that Bitcoin or other altcoins are anything more than high risk speculative investments that are predominantly controlled by a small number of miners, whales and market makers.