Bitcoin (BTC) with a 95% correlation to the S&P 500 may chase traders this week, as an analyst warned that a 400-point crash could hit soon.
In the latest episode of his YouTube Trading Bitcoin series, Tone Vays focused on Bitcoin aligning with stocks.
Bitcoin decoupling in jeopardy
BTC / USD fell on June 25 as markets lost widely due to new concerns about coronavirus infection.
Despite bullish news for Bitcoin this week, the tight correlation of the largest cryptocurrency with stock markets came back into the spotlight as bearish pressure mounted. At press time, BTC / USD had avoided a drop below $ 9,000 to surround $ 9,200.
Theories had long claimed that Bitcoin was “decoupling” macro influences until this week, despite data similarly showing the degree of correlation, particularly with the S&P 500.
Along with rising infections, markets were also hit by previously forecast United States unemployment data, Bloomberg reported Thursday: 1.48 million per week.
“As I’ve been saying for months, I have no reason to stray from my prediction earlier this year that Bitcoin will be stuck between $ 6,000 and $ 10,000 for most of this year.”
Bitcoin vs. S&P 500 3-month chart. Source: skewed
Vays Aims For $ 7,000 BTC Minimum Price
On a technical level, what worried Vays was Bitcoin’s Daily Relative Strength Index (RSI), while BitMEX’s funding rate, which is generally contrary to market indicators, was bullish on Thursday.
“Right now, the BitMEX financing rate is favoring the bulls, saying BitMEX traders are a little enthusiastic on the downside,” he continued.
The RSI that broke below a long-term trend line in June occurred at the same time as the higher Bitcoin price levels compared to May, a notable divergence, says Vays.
If the bears win, a potential low for BTC / USD should be in the $ 7,000 zone, with an RSI of around 30, he added.
For stocks, the outlook was bleak: the absence of a firm support zone could cause the S&P 500 to drop 400 points, or 12%, in the event of a weak close.
Previously, different analyzes warned that this month it would set the stage for a massive correction event in the stock market.