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Bitcoin faces sell-off pressure amidst Coronavirus fears in Europe; stocks fall

Photo of: Dennis Ramos
by Dennis Ramos

At present Bitcoin is facing some major selling pressure today in the midst of COVID-19 led risk aversion in the stock markets. Bitcoin as is seen is currently trading close to $10,650 which is down by 2.9% after it got rejected reaching near $11,000 mark earlier today. There has been an observation today that European stocks and US stock futures have registered a decline whilst the dollar took a rise that has toppled Bitcoin in terms of market cap. 

Most of the important indices in Europe like Germany’s DAX, France’s CAC, and FTSE, are down by more than 3% according to investing.com. Even the futures connected with the S & P 500 index showed a downward slide of nearly 2%. The dollar index though has some reasons to cheer because its value against almost all major currencies is up by at least 0.5%. 

There is a rising fear that the corona cases across Europe might just present a second round leading to impending economic damage. Perhaps the fear that comes with this news has instigated the investors to sell off their equity. The epidemic in the last 7 days has doubled in the UK and if these trends were to continue in the UK, there would be 50k cases per day by the middle of October as per the Chief scientific advisor of the British Government. While Greece has already enforced lockdowns, the UK could also issue fresh mandates for lockdowns. 

For Bitcoin, risk aversion could convert into a higher drop, and US dollars could go up. Also what needs to be noticed is the increase in the flow of coins from the miner wallets to exchanges which could add bearing pressure around bItcoin prices and prospects. This is the Bitcoin transfer flow from Miners to exchanges according to data from the Glassnode.

On Sunday itself, 784 BTC worth about $8 million was transferred to exchange wallets from miner wallets which are higher than its 30-day average outflow of 265 BTC. This kind of trend is usually observed when miners and investors are looking at liquidating their holdings. 

Meanwhile, the Norwegian Government Pension fund which is also known to be the world’s largest Sovereign wealth fund possesses nearly 578 Bitcoin worth $6.2 million. This it has done through its investment in Microstrategy which is a publicly-traded US-based software company. The fund as per Arcane research owned 1.51% of the shares in Microstrategy but the owner still stands small compared to BlackRock and Vanguard which currently owns 15.24% and 11.72% of the shares respectively.

The Norwegian pension fund now owns 577 BTC but what needs to be considered is what would eventually happen when they find themselves in a confusing state according to Dan Tapiero, a global macro investor and co-founder of DTAP Capital. He also added that although the exposure of the fund stands irrelevant for now, it surely will become a point to ponder upon.