US stocks began to correct as fears of the epidemic increased. Meanwhile, bitcoin (BTC) fell below $ 18,800 on December 8 after struggling to break through the $ 19,500 resistance.
Cases of COVID-19 in the United States and Europe are increasing despite strict restrictions. Sweden, for example, which has so far relied on voluntary measures, has introduced a new set of restrictions.
Since October 30, the Dow Jones Industrial Average has risen 13.46% in six weeks. Other major US stock indices, such as the S&P 500, also rose by about 13%.
After a strong six-week rally, talks begin about a stock market correction. Several technical indicators point to overheating of the stock market, which in the short term may affect alternative assets such as Bitcoin.
The total uncertainty coincides with the technical costs of the BTC chart.
Market analysts say that Bitcoin is currently struggling with a critical level that can determine the course direction in the short term.
Overall, analysts point to a resistance range of $ 19,500 to $ 19,600 in the foreseeable future. On top of that, BTC has the potential to break a whole new height and continue to rise.
Should bitcoin crash convincingly below, traders expect $ 14,000 to $ 18,000 as support area.
The timing of the growing uncertainty in the bitcoin market is remarkable, since it coincides with the paradoxical US stock market.
In recent weeks, US equities have recovered, giving rise to asset risk sentiment. However, the recent decline in the S&P 500 during the opening hours of the trading session indicates that investors are becoming more cautious. Holger Zschaepitz, market analyst for Welt, said:
Global equities are under pressure as fears of a pandemic outweigh hopes of a boost to the economy. S&P 500 futures are lower when it comes to caps concerns as the attack grows. The bond made a profit on Monday with a 10-year US return of 0.93%. The stability of the dollar against the euro at $ 1.2120. Gold is trading higher at $ 1,868. # Bitcoin at a price of $ 19.1 thousand. ”
A major source of concern and uncertainty stems from whether there will be an additional monetary stimulus package in the near future. Despite optimism about vaccines, a new wave of barriers and economic restrictions in both the US and Europe weighs market sentiment.
Bitcoin’s correlation with the S&P 500 and gold has declined since October. However, a downturn in the stock markets could also cause the price of bitcoin and gold to fall, at least initially, as it did in March.
An indicator of fear and greed in cryptography. Source: Digital Asset Data, Alternative.me
Another variable to consider is the weak volume of the bitcoin market among record levels of “extreme greed” based on the Crypto Fear and Greed Index, reports Cointelegraph. The daily volume of BTC is in a downward trend compared to previous weeks, which also indicates a high level of caution in the market.
JP Morgan’s optimistic views are changing
Despite a short-term decline in feelings of risky assets, JP Morgan says the market is still in the midst of an upward trend.
According to Business Insider, JPMorgan strategists have explained that long shares are occupied, and a correction is possible in January. However, the strategists emphasized that any correction in the stock market would be a buying opportunity. They said:
“Therefore, any correction of stocks in the near future will be an opportunity to buy because we believe we are only in the middle of the current beef market.”