Covid-19 Lockdown Selloff Reaches Cryptosphere

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Last Updated on 29 October 2020 by CryptoTips.eu

Jeroen Kok

Jeroen is one of the lead copywriters on Cryptotips.eu and discusses all recent events in the crypto market. This includes news updates, but also price analyzes and more. He developed his passion for cryptocurrency during the bull run in 2017. He has learned a lot since then. The combination of cryptocurrency and creative writing is perfect for Jeroen and an excellent way to share his knowledge with a wide audience. Find me on LinkedIn / jeroen@cryptotips.eu
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The stock market selloff that started earlier this week changed into higher gears yesterday and even dragged the crypto market down with it. Whereas some commentators in the crypto markets had predicted that Whales would start profit taking as soon as Bitcoin reached $14k, the overall drop was less than previously expected when markets take a dive.

The common knowledge is that crypto falls harder than stock markets whenever a major selloff over a multiple day period intensifies. This has to do with the fact that investors are leveraged into crypto more than they are into common stocks.

In common stocks the major Wall Street investment funds and pension funds do not immediately run out of the market whenever there is a 5% slide downwards, whereas in crypto this tends to be the case. As crypto is a much smaller market, there is more fluctuation.

Advertentie.

Whales selloff ?

Just as Bitcoin neared the $14k threshold and thus its highest point for the past three years, rumors about a possible new lockdown in France started to surface. European stock markets continued their downward slide, which they had initiated earlier this week, with renewed force, taking the crypto market down with it. Bitcoin reached for $13k again and Ethereum dove underneath the $400 mark. Whales were clearly selling off in tandem.

However, if we compare to previous selloffs, like the one we saw in March of this year, it is clear that the crypto market faced a comparably slower selloff than the stock markets did, or at least so far.

The Nasdaq composite index ended down almost 4% and the Dow shed almost 1,000 points, down 3.5%, upon the fear that a Biden win in next week’s presidential election might come with a US lockdown. In comparison, Bitcoin dove down some 50% during the March madness which accompanied the first European lockdown. At this moment, it does not seem as though the crypto market is ready for such a dive.

Then again, it could still be early.