U.S. stocks are starting to improve as concerns surrounding the epidemic grow. Meanwhile, the price of Bitcoin (BTC) has returned below $ 18,800 on December 8 after a fight to break resistance at B 19,500.
Despite strict restrictions, COVID-19 cases continue to rise in the United States and Europe. Sweden, for example, which has so far relied on voluntary action, has implemented new restrictions.
Since Oct. 30, the Dow Jones Industrial Average has risen 13.46% in six weeks. Other major U.S. stock market indices, such as the S&P 500, rose about 13%.
Calls for correction are rising in the stock market following a strong six-week rally. Some technical indicators suggest an overheating equity market, which could negatively impact alternative assets such as Bitcoin in the short term.
Macro uncertainty coincides with BTC chart technology
Market analysts say that Bitcoin is currently fighting at a critical level that could guide its short-term price direction.
In general, analysts point to the $ 19,500, 19,600 limit as an important resistance area in the near future. On top of that, BTC is likely to continue the rally by breaking from the new-all-time high.
If Bitcoin definitely breaks below it, traders expect anywhere between 14,000 and 18,000 as a support range.
# Bitcoin The price is close to a critical technical level pic.twitter.com/wrr2IcUVqv
– Naeem Aslam (@ NaumAslam23) December 8, 2020
The timing of the growing uncertainty in the Bitcoin market is significant as it coincides with an American stock market.
Over the past few weeks, U.S. stocks have rallied, fueling risk-aversion sentiment. But the recent pullback of the S&P 500 in the hourly trading session indicates that investors are cautious. Holter Zschepitz, Welt’s market analyst, Said:
“Global stocks are under pressure as epidemiological anxiety exceeds expectations. S&P 500 futures fell amid fears of sanctions as the infection spreads. Euro 21 at 1.2120. Gold traded higher at 68 1868. B # Bitcoin at 19.1k. “
The primary source of fear and uncertainty is whether the additional financial stimulus package is coming in the near term. Despite the optimism surrounding vaccines, U.S. And another wave of lockdowns and economic restrictions in both Europe is putting pressure on market sentiment.
Bitcoin’s relationship with the S&P 500 and gold has been declining since October. However, the decline in equity markets will also see a pullback in BTC and gold prices, at least in the beginning, which was seen in March.
Another variable to consider is the deficient volume in the Bitcoin market between the record levels of “extreme greed,” based on the crypto fear and the greed index, as Syntelgraph reports. Compared to the previous week, BTC’s daily trading volume has been in a downtrend, which also indicates an elevated level of caution in the market.
JPMorgan’s optimistic outlook is a variable
Although short-term sentiment around risky assets is declining, JPMorgan says the market is still in the midst of a bullish trend.
According to Business Insider, JPMorgan strategists explained that the “long equity” trade is more crowded and is likely to be corrected in January. However, strategists insisted that any improvement in the stock market would be an opportunity to buy. He said:
“Thus any equity correction will introduce a buy in the near term because in our opinion we are only in the middle of the current bullish market.”
