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Correlation Between Bitcoin (BTC) And S&P 500 Points To Major Sell Off Ahead – Crypto Daily


Bitcoin (BTC) investors keep pointing to correlations between the S&P 500 and Bitcoin (BTC) when it suits them most of the time. However, when things start to get too realistic, this correlation is all of a sudden forgotten. A lot of analysts and investors have in the recent past pointed to short term inverse relationships between the S&P 500 and Bitcoin (BTC) but in that they have ignored the long term direct relationship that makes a lot more sense. It is important to note though that if the S&P 500 (SPX) rises when BTC/USD falls at some point that does not necessarily mean that Bitcoin (BTC) will rise when the S&P 500 falls. The weekly chart for S&P 500 shows that it is ready for a decline towards the bottom of the descending channel.

The next decline in the S&P 500 is expected to be a brutal one which might lead to the price ultimately finding support on top of the 200 week moving average. Historically, this level has been a key support level for the S&P 500 and if it succeeds in falling down to this level in 2019, we might see the stock market bottom this year. This is where Bitcoin (BTC) and the S&P 500 share a similar outlook. The S&P 500 has started to decline before BTC/USD but both have reached overbought conditions on the weekly time frame and are ready to decline. If the S&P 500 declines below the 21 week exponential moving average and then the 50 week moving average, it will have to fall down to the  200 week moving average. We have long been expecting that to happen but this time it will coincide with a decline in BTC/USD.

For Bitcoin (BTC), this decline might take the price below the 200 week moving average and will thus be a lot more brutal than the decline in S&P 500. However, it is important to note that BTC/USD has one last move remaining to the upside before it starts to crash again. This time the decline in S&P 500 and BTC/USD might come at the same time as investors panic to get out of risky assets to protect their long term investments. Bitcoin (BTC) being a highly speculative asset is still a lot likely to take a hit when the S&P 500 goes down. If the S&P 500 does not fall below the 50 day moving average and starts bouncing from there, we can expect BTC/USD to go down harder as investors would want to put more money in stocks.

We can point to many correlations between Bitcoin (BTC) and the S&P 500 (SPX) but the fact of the matter is that it all comes down to priorities. Most professional investors value income generating assets like stocks and bonds over risky/highly speculative assets like Bitcoin (BTC). They are more likely to hold on to companies that they have known for a long time than to go beyond some digital currency that they think may or may not exist in a few years from now.



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