While crypto may be an uncorrelated asset class, one analytics firm says that the virus fears had an “undeniable effect” on cryptocurrency prices, following the massive sell-off in both stocks and crypto on Monday.
However, on Tuesday, markets turned green as is back above USD 8,000 again. At pixel time (12:43 PM UTC), it trades at c. USD 8,112 and is up by 3% in a day, trimming its weekly losses to 8.7%. is unchanged in a day, while other coins from the top 10 advanced up to 2.5%, except that rallied 8%.
Meanwhile, according to crypto analytics firm Santiment, there is a relationship between the rates at which the coronavirus is being discussed on social media channels like Telegram, Reddit, Pro Traders Chat, and Discord, and the price of bitcoin.
The #fear is real worldwide regarding #COVID19. And yes, this has had an undeniable effect on #crypto markets. We b… https://t.co/VeS7QMrMlv
— Santiment (@santimentfeed)
“[…] whenever these discussions [about the virus] have skyrocketed, BTC has plummeted,” Santiment wrote on Monday while adding that we are currently “at or near all-time high levels of discourse about the coronavirus.”
What traders should do now, according to the firm, is to “look for the first bit of encouraging global news” about the virus, which should be taken as a sign that “FUD [fear, uncertainty, doubt] is easing up.”
“Cryptocurrency is driven by sentiment, and there's no greater proof of this than what we are seeing now,” the firm added.
Contrary to what Santiment’s analysis would suggest, however, the latest sell-off in bitcoin appears to have caught even industry insiders by surprise, with for example COINBASE CEO Brian Armstrong saying he was “surprised” to see bitcoin fall.
Surprised we're seeing the Bitcoin price fall in this environment, would have expected the opposite.
— Brian Armstrong (@brian_armstrong)
The same sentiment was also shared by the technical analyst and YouTuber Alessio Rastani, who said in his latest bitcoin market update that the latest drop came unexpectedly and that his main expectation was that “the bullish uptrend could continue.” However, the analyst also noted a recently “high correlation” between stocks and bitcoin, saying that “bitcoin and the stock market peaked at about the same time” in February.
