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  • Bitcoin resumed the decline after a failed recovery attempt towards $6,000.
  • Growing correlation with stock markets out BTC/USD at risk.

Bitcoin (BTC), the largest digital asset with the current market value of $84.2 billion, which is 63.6% of the entire market, has lost over 14% in recent 24 hours to trade at $4,500 by press time. BTC/USD attempted a recovery towards $6,000 following the news that the FED slashed rates to zero and promised massive liquidity injections to mitigate the negative economic impact of coronavirus. However, the upside proved to be limited as the coin dropped below $5,000 amid massive sell-off on the global financial market. 

The global equity markets are deeply in red with German DAX,  British FTSE100 and CAC40 down over 10% since the beginning of the European session. American futures on stock indices are also in red, which means that Wall Street is likely to open with the nearish gap. 

Many industries and markets are swept by panic, while investors tend to flee risky markets. Considering that the correlation of Bitcoin and other digital assets with the US stock market has increased, we may see another sell-off once the US markets are open.

BTC/USD: Technical picture

Bitcoin slumped below SMA200 weekly, which is regarded as a strong bearish signal. Currently, this barrier is located at $5,500, and recovery above this area is absolutely necessary to mitigate the pressure and improve the immediate technical picture.  The next important barrier is created by $6,000. This psychological level stopped the recovery on Sunday. Once it is out of the way, SMA100 weekly currently at $7,100 will come into focus. 

On the downside, the initial support is created by $4,000. If it is passed, the recent low of $3,886 will come into view. This is the lowest level of the previous week and a strong backstop for the sell-off. A sustainable move below this area will unleash strong bearish potential and push $3,000 in no time.

BTC/USD weekly chart

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