Bitcoin is being left behind in the risk-on rally sweeping through global markets in the wake of news that a large-scale coronavirus vaccine study delivered the most promising results yet.
That’s helped to push the largest cryptocurrency below the upper limit of its so-called Trading Envelope, a move that technical analysts say normally suggests a reversion to its mean may be in play. The measure tends to smooth moving averages to map out higher and lower limits.
Bitcoin fell as much as 3.3% to $14,831 during New York trading hours on Monday. It approached $16,000 earlier, the highest level in almost three years. The digital token has jumped more than 40% since September.
“Today’s reaction mirrors gold, and it goes to show you that for many people, Bitcoin is a safety trade,” said Edward Moya, a senior market analyst at Oanda Corp. “With today’s news, you have one of the biggest risk events taken off the table, for the most part, and you saw people quickly reduce their crypto exposure.”
Crypto fans maintain that today’s decline is unlikely to last. Optimism over rising institutional investor interest has led Bitcoin to more than double this year.
“I don’t take today as being indicative of any long-term trend, up, down, sideways, whatever,” said David Tawil, president of ProChain Capital. “The confluence of two major events I think put today in a separate category, so my expectation is that Bitcoin will continue its march upward.”