Bitcoin, the S&P500, and the Coronavirus

Correlation, and Case Loads

Though I could ramble on with nuance details about these 4 charts it’s actually a very simple relationship between Bitcoin, the S&P500, and the Coronavirus.

Chart 1 shows that during uncertain times Bitcoin and the S&P500 are very correlated.

Chart 2 shows the S&P in pullback mode with the supports & gaps outlined. The market is pulling back for 2 reasons. It has been in an unabated raise since the last bottom and American Coronavirus cases are spiking.

Chart 3 shows the rise in cases but no rise in deaths yet. I believe the market is pricing in a rise in deaths the last 10 days. The time it takes from transmission to death means that the death chart should start to rise this week if there is a correlation.

If the death chart does not significantly rise in the next 14 to 17 days then the markets will likely start debating a risk-on atmosphere again. A lack of significant rise would likely be attributed to the age group of those getting the virus.

What’s Driving the New Deaths Per Day Chart?

The Spring wave really impacted the elderly. This early Summer wave has an average infection age nearly 20 years lower than the spring. This has been attributed to protests in some areas, and in other areas not.

Generally speaking American youth are not taking the virus as seriously as their international counterparts and the data shows it. This is a Federal, State, Municipal, and Family problem. There has been little in the way of strong leadership across the board.

Disclaimer

CA25 & November Implications

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A Rapidly Changing Narrative

Democrat Katie Hill flipped this seat in the last election with 54.4% of the vote over incumbent Republican Steve Knight, who had 45.6%. Mike Garcia reclaiming CA25 by a 12 point margin in LA/Ventura mixed with Biden’s over performance in the California Primary shows that more people want a “moderate” approach to politics than the media is letting on.

The rapidly changing outbreaks across the world mean than there is no easy way to model risk. If a 2nd wave of Coronavirus infection is not wide spread during election season and there is still recovering jobs numbers then Trump gains from the crisis. The worse a 2nd wave is the better presumptive nominee Biden will do in Election 2020 polling.

Disclaimer

Bitcoin April Rally

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Is it time for BTC/USD to cool off?

Back in March Bitcoin showed itself to be pa risk-off trade because of the Coronavirus pandemic. The fear of a lack of liquidity ravaged almost all global markets. Bitcoin was not spared.

The subsequent rally throughout April has done a solid FIB retrace and the retail raid zones on the 4H & 1D charts have provided resistance zones so far.

With halving in less than 2 weeks and a near complete recovery of the sell off this will certainly entice bears to try and push their weight around again soon.

BTCUSD has been moving along with stock markets as the world is trying to calculate what is fair value and what risk is worth taking on. Bitcoin will likely be an analog of the larger marketplace because liquidity is impacted across all markets when greed or fear is at play.

Disclaimer

Gold (XAUUSD)

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Gold, USD vs The World

The XAUUSD chart (right) shows Gold priced in US Dollars continuing to show strength over the last 18 months of what seems like never ending global crisis situations.

Gold as seen in most non USD markets has made new all time highs (ATH’s). Canada is used as the comparative example because it is a G7 country and has a history of stable governments and resource development. The fact Gold is running away from the old ATH shows that every nation, even America, that risk happens fast.

Possible Cup & Handle

There is a case to made for a Cup & Handle (C&H) formation on the XAUCAD chart, and if so the measured move has recently reached its general target area. The Coronavirus wave is starting to wane in Canada and that could be a reason to cause a pull back from the C&H measured move high.

If the above were to happen that would result in some consolidation of the XAUUSD chart. That would create perfect conditions for the handle to form on the chart.

Unseen risk factors and/or more Coronavirus complications could create a more volatile upswing. However, for the time being there we want to only focus on the chart that is before us. The chart tells a detailed story and the unseen levels of debt & restructuring being piled on nations certainly can be the trigger for Gold priced in USD to make new ATH’s.

Disclaimer

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