Bitcoin price slipped back to the magical $10,000 level yesterday as a risk-off move started during the North American trading hours. The USD caught a bid across the board and sent the Dow Jones, Nasdaq100, and the S&P500 indices lower.
It is the first correction in a while, albeit a big one for Nasdaq100. The move lower sent a risk-off sentiment, and investors look for safe-haven. Where to find it? In gold and Bitcoin.
The two still move in a correlated manner, and their close, positive correlation is a problem when discussing the diversification benefits, they might bring to a portfolio. In other words, for as long as the correlation is close to 1, as it is now, one must choose either gold or Bitcoin to diversify. Not both of them.
Switzerland to Accept Tax Payments in Bitcoin and Ether
The funny thing is that the move lower in Bitcoin came during a day when the digital currency received some very good news. Switzerland, home to hedge funds and commodity traders, announced that it will accept tax payments in Bitcoin and Ether starting with 2021.
If this is not a positive sign of increased adoption, nothing is. Yet, Bitcoin price failed at $12,000 and lost about $2,000 of its value.
Bitcoin Price Technical Analysis
The price of Bitcoin came back to the level that acted as a resistance. For two months, it consolidated in a bullish formation before breaking above the $10,000. It finally broke higher but formed a head and shoulders pattern that sent it back to former resistance.
From a technical point of view, Bitcoin should find support here. But, as it turns out lately, it is not only about Bitcoin anymore, but about the USD too.
Bulls may want to buy the $10,000 for a move back to the $12,000 and with a stop at $9,000. This way, they will play the support scenario.
Bearish may want to give it a push lower. If Bitcoin breaks below the $9,000 level, it opens the gates to a larger move. Hence, selling there with a stop at $10,000 and a take profit at $7,000 makes sense from a medium to short-term perspective.