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Bitcoin, Stocks and Gold Plummet as Markets Brace for US Presidential Election

DATE POSTED:September 21, 2020

Bitcoin, stocks, and commodities are tumbling as the number of coronavirus cases continues to rise and the impending U.S. presidential election drives fear into the market.

The Dying Wishes of Ginsburg

The world mourned the death of Supreme Court Justice Ruth Bader Ginsburg. She was a well-respected feminist and a thought-leader in jurisprudence. However, a letter to her granddaughter has added fuel to the contentious presidential election between President Donald Trump and nominee Joe Biden:

“My most fervent wish is that I will not be replaced until a new president is installed,” it read.

The Republican-controlled Senate seems adamant about pushing through another Justice, raising concerns that the lifelong-position will influence future Supreme Court decisions in favor of conservative policies. Democrats are pushing to fill the vacant seat after the presidential election.

The Volatility Index (VIX) responded violently to the situation. The Chicago Board Options Exchange’s VIX is a measure of the implied volatility in the S&P 500. 

It rose above $30 for the second time this month as the markets continue to plunge. During times of calm, the VIX index usually trades under $20, while $30 acts as the upper limit for world-shocking events like wars or terrorist attacks.

CBOE VIX indexCBOE VIX index for S&P 500. Source: Ycharts

As previously reported on Crypto Briefing, these highs in the VIX index no longer serve as a sound buy indicator. The COVID-19 pandemic has pushed market uncertainty even higher, with the VIX trading in the $70s—prices similar to those during the 2008 financial crisis. 

As uncertainty rises in the global equity markets, Bitcoin tends to move in tandem with stocks.

Stockpiling Cash and Selling Bitcoin

Europe is still reporting 40,000 to 50,000 new coronavirus cases daily. The governments of France and Spain have already imposed additional restrictions on day-to-day activity to curb the virus’s spread. Britain is mulling over a decision to impose a nation-wide lockdown, similar to the one imposed earlier this year.

The associated fear of an economic slowdown is causing a flight to fiat. Reserve currencies like the U.S. dollar and Japanese yen are surging. The strengthening of these currencies indicates growing risk-off sentiment in the market. 

US dollar futures prices monthly chartU.S. dollar Futures Prices for Current Month Source: TradingView

Gold prices also plummeted 2.3%, suggesting that the investment markets are apprehensive of further crashes and instead want to increase their cash positions.

The Bitcoin price is currently testing the level around $10,500, which was the high before the COVID crash in the global markets.

Bitcoin / US dollar price chart year-to-dateBTC/USD daily price chart. Source: TradingView

BTC has broken below its short-term ascending trendline, which began after the plunge at the beginning of this month. Support at $10,000 is critical for bulls. If prices breakdown below that level, BTC will likely oscillate between support and resistance levels in its parallel channel between $8,900 and $10,000.