MARKETS REPORT: Bitcoin eyes $9,000 as trader warns institutions are short, fear growing

Bitcoin fell back towards $9,000 on July 14 as fresh stock market worries due to coronavirus weakened bulls. 

Having reached local highs of $9,330 on Monday, BTC/USD lost momentum overnight, in step with a dip on Wall Street with Tuesday seeing further losses.

At press time, $9,200 was the focal point, hours after lows of $9,095 — maximum 24-hour losses of 2.5%.

As Modern Consensus reported, Bitcoin thus continues its correlation with macro markets. The mood is changeable, with coronavirus dictating investor sentiment in the US and worldwide. 

“Equities are navigating through a ‘zone of uncertainty,’ because earnings visibility remains elusive and fresh spikes of COVID-19 are occurring in the majority of US states, delaying and even rolling back economic reopening,” Terry Sandven, chief equity strategist at the wealth management unit of Minnesota-based US Bank summarized to the Financial Times.

For veteran trader Peter Brandt, who was eyeing the Nasdaq’s performance, Monday signalled a rare occurrence which had much in common with February—one month before March’s major crash. During that episode, Bitcoin fell to $3,600.

“Today’s sweeping key reversal is a repeat of Feb 20, the start of the Feb/Mar decline,” Brandt warned.

Institutions “relatively happy” being short BTC

More bearish signs came in the form of Bitcoin futures behavior on Tuesday. As noted by popular trader and analyst fil₿fil₿ on his dedicated Telegram trading channel, institutional traders are now short and are furthermore “relatively happy in that position.”

“The CME COT report from last week shows Bitcoin positioned as it was back in Feb/March,” he reported, referring to the derivatives marketplace’s commitment of traders report.

“…Note the POC (point of control) on the CME at 9365 goes to highlight how important that level is.  If the bulls can somehow overcome it, we know that there will be a squeeze on… the institution side of things.”

Last week, fil₿fil₿ had warned that signs of a March repeat were already present in futures. Now, he urged caution — bidding support for BTC is only suitably strong in the $8,000 zone, leaving plenty of room for a drop towards the 20-week moving average at $8,200.

Investors in wait-and-see mode

Bitcoin has yet to capitalize on appetite for safe haven assets. While gold continues to circle nine-year highs of $1,800, BTC/USD has failed to put in significant progress beyond its strong recovery from the March crash.

Year-to-date, however, investors have been completely shielded from global turmoil — Bitcoin returns total 28.3%, with gold on 18.7% and the S&P 500 on -2.3%, data from Skew confirmed on Tuesday.

The outlook for the short term meanwhile provides little hope for a break-up of the status quo. Coronavirus cases continue to set daily records, directing market sentiment which in turn contributes to Bitcoin’s own behavior. 

A broadly wait-and-see attitude among hodlers is reflected in the Crypto Fear & Greed Index, a sentiment gauge which continues to be planted in “fear,” just short of its “neutral” range. Performance has remained flat — between 38/100 and 44/100 — since June 25.