Potential Dow Jones (DJI) Crash Might See Bitcoin (BTC) Decline Again 

The price of Bitcoin (BTC) is once again rallying higher past $8.8k showing signs of strength. Meanwhile, the Dow Jones Industrial Average (DJI) also seems to be rallying towards the 200-day moving average. However, all such bullishness is not likely to last for long. The most probable scenario is that the DJI will end up declining down to the 200-week moving average and when that happens, we can expect to see BTC/USD at $7.7k if not lower. This is nothing unprecedented and has happened before. If we were to see the DJI drop below the 200-week moving average it would be the beginning of a major downtrend in the stock market and all this would be extremely devastating for Bitcoin and other cryptocurrencies. 

It is important to realize that the whole Coronavirus situation is a growing development and it is expected to get worse before it gets better. During most such pandemics, governments are slow to respond and they end up doing a lot of damage before any cure comes out. This time, it has major economic implications as it started from China and has already crippled major supply chains. The stock market is merely reacting to that. The recent reaction was somewhat of an overreaction but this is eventually going to lead to further downside long term if the situation does not normalize soon which appears to be the case. A study from Harvard says that the Coronavirus could infect more than 70% of the world. Even though the mortality rate is still low at around 1%. There would still be a large number of people infected which would create plenty of fear in markets. 

The daily chart for BTC/USD shows that the price may yet decline to the bottom of the ascending channel that it seems to have now entered. A lot of retail bulls are now sketching inverse head and shoulders on the chart and thinking about price targets of $14k, $20k and higher. The market makers and whales now have the perfect bull trap setup just before halving to trap in all such traders with unreasonable expectations. 

The previous downtrend was more stretched out. It saw a major decline and then the price shot up and declined gradually. The S&P 500 (SPX) was in a good position back then but this time things are a lot more vulnerable. Major financial markets are losing ground. We are seeing the STOXX Europe 600 and the UK FTSE 100 also show signs of weakness. These are bearish developments for larger financial markets which will hurt smaller  and riskier markets like the cryptocurrency even badly in the weeks and months to come.