Despite a significant rally in the price of both bitcoin and other major cryptoassets since the market crash on March 12, uncertainty still looms in both the crypto market and the broader financial market about the impact of COVID-19 and the economic downturn that comes with it.
Although the US stock markets have seen a bounce higher this week, the selling pressure in the stock market has been severe throughout much of March. Meanwhile, the crypto markets have largely seen bullish trading since the major crypto sell-off in mid-March, with both bitcoin (BTC) and ethereum (ETH) trading significantly higher this week.
While both the crypto market and the stock market has been trading higher as of late, it seems that the shift to bullish trading happened sooner in the crypto market than in stocks. While crypto turned higher almost immediately following the sell-offs on March 12 and 13, stocks had already been in decline since late February, and continued to trade sharply lower until March 24, when the US stock market moved higher.
However, not everyone is convinced that both markets are out of the woods yet.
Anthony Pompliano, Co-founder and Partner of crypto investment firm Morgan Creek Digital, said that the common message he has received from talking to “investors and operators all day long” is that the economic impact of the virus is still “wildly underestimated” by market participants. Michael Arrington, a partner at Arrington XRP Capital and the founder of IT media outlet TechCrunch, added in the same Twitter thread that “the market is in total denial.”
Meanwhile, in the Cryptoverse, there are also signs of “disbelief.” Despite bitcoin recovered above the USD 7,000 level, the “Fear & Greed Index” by Alternative.me still shows an “Extreme Fear” reading:
Typically, “disbelief” is used to refer to the psychological phase of a market cycle that occurs just as a new major rally gets started, based on the famous Psychology of a Market Cycle graphic.
Also, disbelief in the currently up-trending market seems to be found elsewhere as well, with other traders saying that a new breakout to the upside means they’ll “be forced to flip” from being bearish to becoming bullish.
Breakout upwards and I’ll be forced to flip my bearish to a bullish bias.
At pixel time (15:29 UTC), BTC trades at c. USD 7,315, and is up 3% in a day, and 13% in a week, trimming its monthly losses to less than 15%.
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