The Second Wave of the Pandemic Scared the Market and May Crash Bitcoin (BTC)

The Second Wave of the Pandemic Scared the Market and May Crash Bitcoin (BTC)

Source: Johns Hopkins University

Against Bitcoin rally, which broke through the resistance level of $10,500 and rushed, according to forecasts, to the $14K level, the head of the WHO announced the deterioration of the situation with COVID-19 in the world.

Investors and traders had faced the negative impact of the pandemic on the markets in March-April. Will the market drop under the attack of the second wave?

The World Health Organization announced that the number of infections has doubled again in the past six weeks. At the height of the pandemic this spring, the correlation between all investment markets, including the cryptocurrency one, has become clear. The commodity and stock markets have dropped, taking cryptocurrencies with them. If the second wave of COVID-19 is really here, the situation may be repeated. But now traders are ready for it and can exploit the situation with profit.

If the pandemic is back and WHO CEO Tedros Adhanom Gheybreyesus is right, then traders will likely buy low in anticipation of an imminent rally. But there are conflicting opinions about the timing of this rally. If you expect a repetition of the spring situation, then this is a matter of 2-3 months. However, WHO is reporting a more dangerous SARS-COV-2 virus that appeared in Vietnam, which was least affected in the spring. If the second wave is associated with this type of virus, then it is impossible to predict the prospects for market recovery.

In the spring, the drop in the markets was of a panic nature. The leading S&P 500 index fell 30%, Bitcoin – 50% and the price of oil went into negative territory. Now oil market analysts predict a drop in crude oil prices below $40 per barrel. However, the fall in other markets, including cryptocurrency, is unlikely to be as fast as in March. Nevertheless, this market has already suffered losses. Over the past one night, traders have lost at least half a billion dollars. This was due to the sharp rise in Bitcoin over $11,400.

The analytical service Coinalyze notes that exchanges have begun to automatically close short positions by margin calls. A margin call is triggered when the trader’s account balance approaches zero. The largest volume of liquidations of short positions was carried out by the largest crypto exchange Binance, over $126 million. The BitMEX derivatives platform closed short positions for $124 million. Large volumes were processed by Houbi, Bybit, and Bitfinex. Short positions are made in the hope that the market will drop. It is not clear what prompted traders to open short positions now. After all, for several weeks BTC has been showing signs of long-term rise.

In this situation, given the reports of the second wave of the pandemic, it is likely that Bitcoin will roll back to the level of $9K or even $8K. However, in the near future, it will continue to rise, according to experts. Optimists indicate a target of double the current level, that is, $22-23K.