Bitcoin’s second attempt to close above $16,000 hit a wall on Monday as traders assessed the latest progress on a coronavirus vaccine.
The benchmark cryptocurrency fell 0.77 percent, suggesting that its last week’s advance, which took its price to a three-year high, would reverse in the daily sessions ahead. Bitcoin also plunged on technical merits – to neutralize it overbought status on medium- and long-term charts – as traders booked their profits at the recently-established year-to-date high of $15,977.
Bitcoin sell-off accelerates on positive coronavirus vaccine news. Source: BTCUSD on TradingView.com
Conversely, investors showed an intraday bullish bias towards the US Dollar Index (DXY). The greenback’s rate against a basket of foreign currencies surged 0.20 percent. Bitcoin and the US Dollar Index have a positive correlation with one another.
Bitcoin fell amid decreasing bids for safe-haven assets on Monday. Capital started shifting to the US dollar and the US stock market after Pfizer, a pharmaceutical company, and BioNTech SE – its partner – showed positive results in their vaccine trials against the novel coronavirus.
The news revived the pandemic losers’ fortunes, such as banks, airlines, and travel companies. Simultaneously, tech stocks that have so far outperformed other sectors performed less well on Monday.
Bitcoin rose prominently against the backdrop of the pandemic and its economic fallout. With the global central banks intervening with massive stimulus packages and other expansionary monetary policies, investors moved into Bitcoin for its anti-fiat features, primarily scarcity.
After Pfizer announced its coronavirus vaccine was more than 90% effective in preventing Covid-19 for those who had no evidence of previously being infected, CEO Albert Bourla said he believes the world “can see light at the end of the tunnel.” https://t.co/3acYVdSGkV pic.twitter.com/7kCDOAlZIO
— CNBC (@CNBC) November 9, 2020
A vaccine served as a risk for Bitcoin. It increased the possibility of curing people to reduce their ability to spread the coronavirus infections. In turn, the vaccine allowed investors to think in the direction of reopening economies more safely. It also pointed at reducing the need for stimulus packages.
The news’s impact was also visible on Gold, a Bitcoin rival. The precious metal dived almost 4 percent ahead of the New York opening bell Monday.
Before the vaccine news, Bitcoin showed symptoms of topping out after failing to hit $16,000 twice in the last four days.
On the 4H chart, as shown above, the cryptocurrency formed what appears to be a Double Top. Technically, the pattern serves as a bearish reversal indicator 75 percent of all the time, according to Samurai Trading Academy.
If valid, the Bitcoin price risked falling towards $14,325, the Double Top support to test the level for a breakdown move towards $12,700 (the maximum length between the support and the Double Top’s peak).
Conversely, if Bitcoin shakes down the vaccine worries, then it may attempt to break above $16,000 all over again to retest $20,000, its record high to date.