The price of bitcoin (BTC) price took a bullish turn on Tuesday as the digital asset surged to $8,150 before encountering resistance, which saw the price temporarily pull back to $7,730.
The S&P 500 and Dow followed a similar trajectory by surging at the opening bell before pulling back sharply in the afternoon trading hours, Cointelegraph reported.
Both indexes rallied into the close, possibly on the release of additional details about US President Donald Trump’s proposal to shore up the US economy by extending relief funds to key industries, and a payroll tax to assist workers hurt by Covid-19’s negative impact on business.
The S&P 500 ended the day with a 5.17% gain and the Dow recovered more than half of it’s March 9 loss by rallying 1,167 points. Interestingly, bitcoin’s price also made a second attempt at $8,000, topping out at $7,965 right around the time that US markets closed.
Despite the strong performance, economist and Allianz chief economic officer Mohammed El-Erian told CNBC, “I don’t think we’ve made the lows yet, but it is going to be incredibly choppy.”
El-Erian elaborated by saying, “It’s going to be very volatile but around, unfortunately, a downward trend for now.”
El-Erian has also repeatedly cautioned investors against buying the current dips occurring within the market and the continued spread of the coronavirus in Europe and the US is clearly weighing on investor sentiment.
At the time of writing the Dow futures were down more than 450 points and the S&P 500 futures had dropped by 2%, suggesting markets could drop sharply again.
Bitcoin versus gold
Crypto investors subscribing to the belief that bitcoin functions like a store of value and hedge against traditional market volatility are closely watching to see how the digital asset performs during the current correction.
For the past two weeks, the crypto asset has moved in tandem with the price action of equities markets but data from Skew shows that Bitcoin returns are still up 9.45% in 2020 while the S&P 500 has dropped by 10.79%.
For those who believe bitcoin is “digital gold,” data shows the two assets out of sync on the monthly time frame but both bitcoin and gold are up 9.45% and 8.82% in 2020. This suggests that regardless of the fact that bitcoin’s price has dropped by 14.85% since March 7, some traders still view the asset as a hedge against volatility.
Unsurprisingly, staunch bitcoin critic Peter Schiff seems to believe otherwise, tweeting: “Bitcoin is no longer a non-correlated asset. It’s positively correlated to risk assets like equities, and negatively correlated to safe-haven assets like gold. When risk assets go down, bitcoin goes down more. But when risk assets go up, bitcoin goes up less. No value in that!”