This week, the S&P 500 released the news by reaching a new all-time high for the day and recovering 100% of the losses caused by the coronavirus pandemic in mid-March.
However, there are indications that the US stock markets may be overvalued. The Buffett Index, an analytical tool that divides the Wilshire 5000 Index by the GDP of the United States, shows 1.7. The figure is very close to the dotcom era high of 1.71, followed by a sharp market correction.
However, one of the main differences between now and the dotcom era is that current interest rates are at record low levels and central banks are pumping huge sums of money to support the economy.
While some pockets may look like a bubble, stock markets are unlikely to collapse on this scale alone.
If the stock market collapses, Bitcoin (BTC) could initially drop due to the tense sentiment, but the price is unlikely to remain low as long as traders who have sold their equity market positions are looking for safe havens to make their money pool.
Recent Bitcoin investments by hedge fund manager Paul Tudor Jones and the growing institutional influx of Grayscale Investments products show that traders view Bitcoin as a store of value and a hedge against inflation.
In the past few months, many cryptocurrencies have outperformed Bitcoin significantly. Let’s analyze some of the altcoins that could perform well over the next few days.
Bitcoin / USD
The bulls pushed Bitcoin above the $ 12,304.37 resistance on Aug 17th, but failed to hold above it. This resulted in a profit by short-term traders on August 18th, dropping the price to a 20-day exponential moving average ($ 11,568).
The Average Directional Index (ADX), which is a component of the Directional Movement Index, remains strong above 35, but the Positive Trend Index (+ DI) and Negative Directional Index (-DI) are approaching each other and the 20-day exponential moving average is settled , Denotes a scope-related short-term action.
If the bears manage to keep the BTC / USD below the 20 day moving average, it could drop into the $ 11000-10900 region. The bulls are likely to defend strongly this area, and if the pair succeeds, it might rebound to $ 12,304.37. A breakout and close (UTC) above this resistance is likely to resume upside.
However, if the bears pull the price below $ 10900, a re-test of $ 10.400 is likely. This is an important support to look out for because when this causes a mood breakdown it becomes very negative.
The -DI is above + DI and is declining by the 20-EMA on the 4-hour chart, indicating that bears have the upper hand in the short term. They are aggressively selling pullbacks to the 20-EMA.
On the flip side, the $ 11,000 level is likely to provide solid support. Heavy bounce will keep the pair between $ 11,000 and $ 12,304.37 for a few days.
The first sign of strength will be a break above the 20 EMA as this will indicate a change in sentiment in the short term.
ETH / USD
The failure of the bulls to hold Ether above the $ 415,634 immediate support level resulted in short-term gains for traders. This pulled the price below the 20 day EMA ($ 393) which is a negative sign.
Next support on the downside is 366. If price bounces from this level, it indicates that bulls are defending this support. The 20-day exponential moving average has settled and the + DI and -DI are close to each other, indicating an equilibrium between supply and demand.
This indicates a range-bound potential action between $ 366 and $ 446.479 for a few days. A break above the area is likely to lead to the resumption of the uptrend, while a break below this area could cause a drop in the next support at $ 320.
The 4 hours chart shows that -DI is above + DI and the 20-EMA is declining, indicating a short-term benefit to the bears. Previously the support of USD 366 was strong support so the bulls will once again try to defend this level.
Strong bounce might increase to $ 415,634. If the price deviates from this resistance, it is possible to trade within the range for a few days.
Conversely, if it breaks the support of $ 366, it will be a major defect that could lead to a drop to $ 320.