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On October 4th and 5th, Bitcoin (Bitcoin) broke above $20,000 and above the long-term downtrend line dating back to April 22nd or November 15th depending on your technical analysis style.
While some traders may be a little more pleased that the price is trading outside the downtrend line, there are enough relevant indicators and macros to support a bullish view on Bitcoin’s price. Have the factors changed?
In reality, BTC’s price has simply “consolidated” through the trendline by trading in a sideways fashion with the price in the range between $18,500 and $24,500 over the past 114 days.
Directionally, Bitcoin and Ether (ethereum) tend to trade in tandem with stocks, and BTC’s Oct. 4 rally to $20,365 came as the Dow, S&P 500, and Nasdaq ended the day up 2% to 3%. happened.
Recall that short-term price action does not necessarily reflect a larger trend change. Coin Metrics Said:
Correlations with BTC, ETH, and S&P 500 have increased recently as the benchmark index dropped to 3600, which has not been broken since December 2020.
Despite the ‘all-in rally’ in the stock and crypto markets on Oct. 4, rising concerns over runaway global inflation, rising interest rates, and other economic concerns are pushing investors to interact with the markets. continue to curb the appetite for This fact is clearly reflected in the third quarter. result.
On October 5, OPEC announced plans to cut oil production by 2 million barrels per day, equivalent to about 2% of global oil demand. Oil stocks rose on the announcement, but the White House may be worried the cuts could complicate the Federal Reserve’s fight against inflation and contribute to higher gasoline prices. I have.
Institutional investors such as Citi and Goldman Sachs generally expect continued equity market volatility, and although both have lowered their year-end targets for the S&P 500, investors still expect a weak 2023. I am predicting.
In any case, with inflation still high around the world and corporate earnings expectations adjusted downwards, the Fed appears confident and determined on its current plan to contain inflation.
None of these developments helped boost investor risk sentiment, and BTC broke the downtrend line given Bitcoin’s correlation with stock markets and its sensitivity to bearish economic news streams. is unlikely to be an indication of a change in trend.
A more convincing development is a range break and a series of daily closes above $25,000.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. All investment and trading movements involve risk. You should do your own research when making a decision.
