Three weeks of losses for the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite seem to be putting downward pressure on the Bitcoin price as it is struggles to get above the $11,000 level.
On Friday (September 18), the three major U.S. stock indexes closed flower for the third straight week. For example, here is the one-month chart for the Nasdaq Composite:
One reason for the recent poor performance of the U.S. stock market is gradual rotation out of technology stocks (such as Amazon and Tesla) due to concerns about valuations of some of the companies that powered the huge rally we have witnessed since March 23.
Another reason is that it appears that there has not been much progress in Washington during the past several weeks in achieving consensus on a new fiscal stimulus package to fight the economic impact of the COVID-19 pandemic.
And unfortunately, the death of US Supreme Court Justice Ruth Bader Ginsburg (aka “RBG”), is likely to make the stimulus package negotiations even more difficult since the Republicans and the Democrats are are going to be fighting hard over the timing of choosing a replacement for her.
It would make sense for President Trump to want to nominate a Republican to replace RBG and get that person approved as soon as possible by the Republican-controlled U.S. Senate and for the Democrats to fight tooth-and-nail to push for a replacement to be found after the U.S. presidential election on November 3 (so that they get the chance to replace RBG with a Democrat in the Supreme Court).
Currently (as of 04:18 ET or 08:18 on September 21), the Dow Jones Industrial Average futures, the S&P 500 futures, and the Nasdaq-100 futures are all trading in negative territory, down by 1.68%, 1.44%, and 1.38% respectively.
Prominent macro-economist and crypto analyst Alex Krüger agrees with the view that the passing of RBG makes it even less likely that we will see a U.S. COVID-19 fiscal stimulus package anytime soon:
Of course, this risk-off mood negatively affects Bitcoin, which generally tends to behave as a risk-on asset. In the past three weeks, as U.S. stock prices have declined, so has the Bitcoin price.
On September 1, the Bitcoin price reached an intraday high of $12,062. Bitcoin is currently (as of 08:40 UTC on September 21) trading around $10,859, which means since that high on September 1, the BTC price has come down almost 10%.
According to Ki Young Ju, the CEO of South Korean blockchain analytics startup CryptoQuant, the on-chain data from his company’s CQ.Live platform — in particular, the metric Miners’ Position Index (MPI), suggests that some of the downward pressure on Bitcoin’s price during the past several weeks could have been due to larger than selling by miners:
The good news for BTC HODLers is that most crypto market analysts/observers still seem to be long-term bullish on Bitcoin.
For instance, here is what angel investor Qiao Wang, a former Director of Products at Messari, thinks about the future direction of Bitcoin’s price:
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.