Bitcoin price correlation with the stock market is astonishing. Moreover, it has started sooner than it was expected. Many in the cryptocurrency market have been shocked by Bitcoin’s over 40% crash in the last week. The crash was so great that comeback signs were non-existent. Moreover, Bitcoin’s fundamental on-chain metrics have undergone major drastic changes in this period as well.
Bitcoin’s volatility index, for instance, overshadowed levels in January and February when the price rallied to $10,500 from around $7,000. Discussions surrounding Bitcoin correlation with S&P 500 have taken center stage across the industry but a report by Kraken suggests that this correlation has been growing since the beginning of the year but has made rapid movements in the last seven days.
At the moment, fundamentals for a rally remain drab because investors are still skeptical regarding Bitcoin’s stability. Besides, volatility remains high and the fear surrounding the Coronavirus continues to create panic in both the traditional and digital markets.
The correlation between Bitcoin and the stocks linked to the American economy is alarming and worrying. Therefore, we have to look at the technical aspect of Bitcoin and whether a recovery to $7,000 in the coming weeks is a possibility.
The hourly, chart clearly shows that buyers are in control especially with the price above the moving averages. The 50 SMA at $5,166 and the 100 SMA at $5,261 are now in line to offer support if the price reverses from levels above $5,400. The RSI has been forming a higher high pattern since the recovery from levels under $4,000. Stability is likely to take precedence if the RSI stays above 50. If Bitcoin bulls manage to retake the support at $6,000, the move could boost the price towards $7,000. However, BTC/USD is not fundamentally ready for a rally and the range between $5,000 and $6,000 could stay in place for a short while.
Spot rate: $5,406
Percentage change: 1.30%
Relative change: 64
Trend: Short term bullish bias
Volatility: High
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