2020 has been a busy year for bitcoin. The closures caused by the coronavirus pandemic earlier in the year caused the cryptocurrency to drop by almost 60%. Its collapse came shortly after an equally strong rebound lifted its price by 220%%
It is safe to say that Bitcoin occupies a profitable niche so far of the year. The cryptocurrency's performance to date of 50% above zero stands higher than the performance recorded in traditional markets, including the US S&P 500 index.
But as it enters the fourth and final quarter of 2020, the bitcoin market is struggling with the prospect of curtailing much, if not all, of its annual gains. Here are three reasons why cryptocurrency is trending downward in the coming time.
# 1 uncertainty in the U.S. election
Move Bitcoin almost in tandem with U.S. stocks at the end of the third quarter. So it seems that currency traders are encrypted they were waiting for more clarity on the outcome of the US presidential election in November. But even when polls showed that Democratic candidate Joe Biden may win the presidency, screw Donald Trump expectations.
The current US president said he would not quietly leave the Oval Office because of his suspicions of voter fraud. Investors took his statement seriously. They dumped stocks in the entire September 2020 in search of security for cash. Meanwhile, bitcoin also fell by 9% in the month despite closing the third quarter in very positive territory.
October expects Bitcoin and Wall Street indices to remain choppy, if not bearish. Thus, the cryptocurrency can revisit previous support levels near 10.400$ and 10,200$ and 10,000 $ as investors move to cash security. Meanwhile, traders with a long-term outlook can limit the bearish momentum by buying bitcoin at local lows.
# 2 delinquency
Another factor that will test speculators on the rise of bitcoin and Wall Street is the rise of bad loans in the United States.
The lack of agreement on the second coronavirus stimulus package is a concern for the unemployed and small and medium-sized businesses. With economists predicting no stimulus until the presidential election, the market is likely to see a rise in mortgage, loan, credit and Rental crime in the fourth quarter.
That could lead to a drop in finance stocks - the backbone of the U.S. economy -. Soon, their losses could spread across the bitcoin market, as traders begin to unload their lucrative positions to cover their losses on Wall Street.
# 3 coronavirus
US markets will continue to trade under the risk of the second wave of coronavirus infection. In the absence of stimulus, followed by threats of another round of business closures, investors may be forced to return to risk-free assets, including the US dollar and government bonds.
Earlier in February through March, a similar sentiment caused the collapse of the bitcoin market. Therefore, unless there is New help available to the U.S. economy, cryptocurrency may fall into the trap of selling sentiment driven by coronavirus.
The bottom line is that stimulus and liquidity can save Bitcoin from getting below 10,000$. Traders should keep an eye on the development at Capitol Hill for more signals. Until then, there is still a risk of significant bearish movements.
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