The price of bitcoin has correlated again with the S&P500
Bitcoin prices have been struggling to break through the $10,000 mark since early May. Aside from three short trips on it that didn’t last very long, Bitcoin didn’t succeed in overcoming this huge resistance. One factor that seems to be preventing further attempts is the loss of volatility in the bitcoin market. In the past few days, bitcoin has traded between $9,100 and $9,600. Bitcoin continued to trade in a narrow range above $9,000. Some analysts expect bitcoin prices to fall again due to lower volatility. Since last week, the price of bitcoin has correlated again with the S&P500, so the impetus for stocks this week could be decisive.
If there is another sell-off in the equity
market this week, Bitcoin could also suffer and fall into the lower $8,000
range. Should this support not hold, the range between USD 7,700 and USD 7,800
is of great interest, according to Krüger. At the same time, however, he also
explained that this possible crash does not change the long-term bullish
outlook for Bitcoin:
Having a look at $BTC technicals, I’d favor
a move down to 8400-8100, back to the averages, prior to continuation higher.
I’d buy that. Could see it early next week as equities push lower. The
following area of interest is 7700-7800.
I’m still long and bullish bitcoin. I think
it calls for patience. […] Largely unchanged since early May.
The lack of upward momentum has led some
analysts to predict that Bitcoin is facing a bearish move in the coming days and
weeks and could slide back into the 8,000 region. The respected analyst Alex
Krüger pointed out that the stock market could have a strong influence on
Bitcoin this week.
The correlation of Bitcoin with the stock
market, especially the S&P500, which Krüger mentioned, was also pointed out
yesterday by Charles Edwards of Capriole Investments. In March and April,
Bitcoin and the S&P 500 traded with a close correlation due to the
uncertainty surrounding the coronavirus. The crash, as well as the recovery of
Bitcoin and the S&P 500, occurred simultaneously. This was followed in
mid-May by the decoupling, which has now been reversed in the past few days, as
Bitcoin & stock correlation in 2020. We
have (sadly) “re-coupled” as of 10 June. Correlations at all time highs.
Notice the trend? High levels of fear and
uncertainty (eg. VIX) = high levels of correlation.
The correlation with the stock market does
not have to be a bad omen, though. As we have reported several times on CNF,
many analysts see the “infinite money policy” of central banks, especially the
US Federal Reserve (FED), as a strong positive influence on the stock market. However,
while the money pump could only mean a short-term recovery for the stock
market, this policy could reveal the long-term value of Bitcoin. Travis Kling
of Ikigai Asset Management recently wrote about this:
A lot of folks have been asking why BTC
isn’t higher right now. If you own #Bitcoin, just be patient. BTC has
historically transferred wealth from impatient hands to patient. Just be
patient. Central banks are doing all the leg work for you as we speak. Just be
On the other hand, the analyst “Parabolic
Thies” pointed out that a fall of Bitcoin to 8,900 or even 8,300 USD is an
optimal entry opportunity. After that he expects a bounce above USD 10,000,
which will turn the current resistance of USD 10,300 into support.
Author : Jake Simmons