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Bitcoin Price Analysis: Erases 75% of October Rally as S&P 500 Hits Record Highs

November 20, 2019 at 4:10 PM | By Jit Sutradhar Markets

Bitcoin looking south after removing three-quarters of the price rally seen in October. The bearish mood came as US equity markets surged in the opposite direction.

Cryptocurrency on market capitalization is currently trading at $ 8,070 on Bitstamp, down 22 percent from a high of $ 10,350 in October. With the pullback, BTC has erased nearly 75 percent from a sudden spike of $ 7,293 to $ 10,350 witnessed in the two-day 26th Oct

Bitcoin’s inability to capitalize on a breakout to five points and drop after $ 8,000 has been associated with a lack of positive catalysts. In addition, prices have jumped above $ 10,000 reported on hopes that the BTC, became a leading cryptocurrency, would benefit from a boost China towards adoption blockchain wide.

While bitcoin has fallen by more than $ 2,000 in the last 3.5 weeks, the US stock market has put on a sterling show, as seen in the chart below.

BTC-and-SP-500-weekly

The S & P 500 rose to a record high of 3127.6 on Tuesday, has found acceptance over $ 3,000 psychological resistance last week. Particularly, the index has rallied for six consecutive weeks, perhaps in response to the expansion of the Federal Reserve’s balance sheet, as suggested by popular analyst Sven Henrich / Northman Trader.

Northman-Trader

The Fed has added more than $ 270 billion to the balance sheet since 11 September and currently has about $ 4.04 trillion in assets, according to the Federal Reserve Bank of St. Louis. Fed Reserve Chairman Jeremy Powell has repeatedly said that the purchase of bonds aimed at the normalization of the money market, which went ballistic in September and pushing the overnight rate as high as 10 percent.

Analysts and investors, however, argues that the Fed has started the last four quantitative easing program (QE), as discussed last month. Under the QE program, the Bank bought government bonds to infuse liquidity into the center of the economy and lower interest rates to boost growth.

Looking ahead, S & P 500 may trim recent gains in the short term, China-US-owned refurbished. political tensions. Chinese foreign ministry on Wednesday threatened retaliation against the decision of the US Senate to pass legislation that aims to protect human rights in Hong Kong amid a crackdown on pro-democracy protest movement.

Community market crypto believe BTC is a risk-off assets. cryptocurrency, however, does not have a credible story as a haven asset, has been recently demonstrated by this CoinDesk Galen Moore, and maybe find a little love in the midst of the US-China political tiff.

That said, if China retaliated by devaluing the yuan (CNY) significantly, BTC can take bids on expectations of increased demand from the world’s second largest economy.

The protests, however, rarely survive. For example, BTC jumped 7 percent on Aug. 5 as CNY slipped exceed 7 per USD. cryptocurrency, however, topped out above $ 12,300 the next day and fell back to $ 9,400 at the end of August, although the CNY continues to slide and reaching multi-year lows 7.1842 on September 3

Furthermore, technical charts show the BTC could extend recent declines for key support near $ 7,700.

Daily and 3-day charts

Daily and 3-day charts

The series of lower highs and lows seen on the daily chart shows the path of least resistance is to the downside.

MACD histogram print bar deeper below the zero line, strengthening the bearish momentum signals. The 14-day relative strength index (RSI) also reported a bearish condition by reading below 50.

The RSI on the chart three days also hovering below 50 and MACD histogram tempting bearish crossover below the zero.

BTC, therefore, looks set to test $ 7850 to 38.2 percent Fibonacci retracement of the rally from $ 3122 to $ 13 880.

Monthly charts

monthly-chart

BTC has dropped to $ 8,000, as expected, after failing to hold on to gains on descending (bearish) 10-month moving average (MA) earlier this month. Great support is now seen at close to $ 7,700 (up 10-day MA).

The RSI on the 4 hour chart (not shown) to report an oversold condition. Therefore, a small bounce to $ 8,400 can be seen before the slide to $ 7,700.

Short term outlook will turn bullish if the price is close to high-volume print UTC on the hurdle down trendline on the daily chart, currently at $ 8,460.

Disclosure: The author does not hold cryptocurrency assets at time of writing.

Image via Shutterstock

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