KEY POINTS

  • Sentiment around Bitcoin has dampened after President Trump delayed negotiations and approval of the stimulus package
  • Bitcoin and the stock market fell in tandem immediately when the president tweeted the announcement
  • Observers are wary of the growing correlation of Bitcoin and the stock market

News of a delayed stimulus package by President Donald Trump has dampened the momentum for Bitcoin, which has tried to get out of the $10,500 range where it was stuck in the last two days. 

Bitcoin opened Monday at $10,795, with traders expecting a new retest of $11,000 or at least to maintain that range. Instead, it went down to the intra-day low of $10,528 and closed at $10,602 on Coinbase. 

According to news outlet Cointelegraph, the shattered momentum could be attributed to fresh news from Trump, who tweeted that the second stimulus package will have to be delayed and it will not be released until after the elections. This meant Americans would receive the stimulus only after November.

The delay comes following a disagreement between Democrats and Republicans on the amount of the stimulus package to be approved. "Nancy Pelosi is asking for $2.4 Trillion Dollars to bailout poorly run, high crime, Democrat States, money that is in no way related to COVID-19," President Trump said on Twitter.

"We made a very generous offer of $1.6 trillion dollars and, as usual, she is not negotiating in good faith. I am rejecting their request, and looking to the future of our country," the president continued, adding that he has instructed his representatives to stop negotiating until after the elections. "Immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business."

President Trump's announcement caused both Bitcoin and the stock markets to fall in tandem. Bitcoin bounced slightly, but the drop effectively erased whatever gains the benchmark cryptocurrency has had in the last two days.

As Bitcoin fell, so did the entire cryptocurrency market. Ethereum closed Monday at $340.75, its lowest in the last 13 days. 

Bitcoin and the stock market falling again in tandem has made observers wary of the benchmark cryptocurrency's correlation with the stock market. Bitcoin was supposedly a non-correlated store of value, a hedge against inflation and the weakening dollar. 

In a previous report, billionaire and Bitcoin investor Michael Novogratz said the correlation between the world's first cryptocurrency and the stock market will not last forever. "To illustrate, if the Nasdaq fell 5% today, bitcoin would probably be lower, not higher. But I think you are going to see those correlations break down," he added.

US President Donald Trump's decision to end stimulus talks comes just weeks before the November elections in which polls show slumping support among voters for giving him a second term US President Donald Trump's decision to end stimulus talks comes just weeks before the November elections in which polls show slumping support among voters for giving him a second term Photo: AFP / SAUL LOEB