Oil as a warning shot: These risks now make Bitcoin correction extremely likely

Bitcoin jumped above the important support / resistance level of $ 7,000 this Thursday, putting investors in a buying mood again. However, BTC was unable to turn the recovery into a full bullish breakout.The benchmark cryptocurrency rose 4.95 percent to $ 7,191.99 after falling more than $ 500 earlier in the week. This upward move was accompanied by a similar recovery in the US stock and oil markets. The Dow Jones Industrial Average rose 2 percent to 23475.82, while Brent crude rose 5.4 percent to $ 20.37 a barrel.The parallel movements once again demonstrated a growing positive correlation between Bitcoin and traditional stocks. The otherwise different assets coincided with the corona virus-related economic crisis. In the meantime, the two recovered together after central banks introduced stimulus packages to protect their economies.

 

Breakdown of the oil is a warning sign

Karen Ward, senior market strategist at JPMorgan Asset Management, comments that investors are very optimistic about the recovery in the equity markets. However, this could be unjustified, as these rallies are due to central bank support rather than concrete fundamentals.Meanwhile, the drop in US oil prices below zero is an alarm signal that shows how insecure the markets (including Bitcoin markets) can be as more than half the world goes into a lockdown to the speed of the coronavirus pandemic slow it down.