Bitcoin price has in the past year shown increased correlation with the traditional stock market. However, as data shows, the asset has held better during the recent sell-off.
Bitcoin price has closed the past eight weeks on a downward trend following the trends happening in the stock market. In fact, for the past decade, the asset has now recorded the highest number of consecutive weeks closed in the red. However, in the past two to three weeks, Bitcoin price has found support and resistance levels between $28.4K and $31k respectively.
To which side the breakout will occur, is not outright clear at the moment. Moreover, the asset has in the past made sudden movements away from conventional financial products.
Nevertheless, the asset has shown an increased correlation with the stock market. Remember the crypto market has seen a significant increase in regulations around the world.
Bitcoin Price and Stock Market Correlation
According to market data provided by TradingView and Coinmarketcap, Bitcoin price has been exchanging hands between $29k and $30k in the past few hours before publication.
Notably, after Bitcoin dropped below $32k a few weeks ago, the crypto community hardly expects another bull market until 2024.
From a technical standpoint, most indicators including the 200MA and the RSI call for a further drop in Bitcoin price. The call is reiterated and demystified by Rekt Capital in a Twitter thread.
“#BTC is down -40% since the Death Cross occurred in early Jan ’22. History suggests that whenever a Death Cross occurs, #Bitcoin experiences a deeper downside. Now that one has occurred, what could we potentially expect?” Rekt Capital wrote.
Nevertheless, Bitcoin’s price could rebound strongly after it meets the 200MA on a weekly chart.
“What’s interesting about the scenario of a -43% post-Death Cross crash however is that it would result in a $22000 #BTC. Which ties in with the 200-SMA, which tends to offer fantastic opportunities with outsized ROI for $BTC investors,” Rekt Capital added.
Other analysts including PlanB forecast that Bitcoin price will not regain its ATH until after the next halving event. Moreover, historical data has shown a similar trend that has been respected.
According to market data provided by CoinGecko, Bitcoin price is down 23 percent in the past year whilst the Nasdaq Composite index (Nasdaq: COMP) is down 28 percent in the same time.
Side Notes
Bitcoin price has in the past year shown increased correlation with the traditional stock market. However, as data shows, the asset has held better during the recent sell-off.
While the United States leads in global rising economic inflation, analysts have observed cash flows to the stock market. According to a recent study, nearly 12 percent of American adults invested in crypto last year.
Institutional investors have proliferated in the crypto market, especially to the DeFi sector, in the past year. And now, two countries, El Salvador and the Central African Republic, have adopted Bitcoin as legal tender.
next