Bitcoin is due for a breakout but will it favor bulls or the bears
Bitcoin’s [BTC] retest of sub-$20,000 levels this week came as a surprise to many traders because the market outlook was in favor of an upside. On the plus side, the dip confirmed support and that there is strong demand between the $19,000 and $20,000 range.
The same support zone underscores an upcoming squeeze zone with a long-term descending resistance line. Zooming out thus reveals that Bitcoin is in a triangle pattern and the current structure suggests that it is a bearish triangle.
If Bitcoin moves as per the bearish triangle pattern, then traders can expect another retest of sub-$20,000 price levels. However, this does not necessarily have to be the outcome.
Bitcoin’s downside this week reflects its correlation with the S&P500.
<p lang=«en» dir=«ltr» xml:lang=«en»>After the recent stock market crash, the price of BTC moved in step with the S&P500 index, and its correlation reached the highest level since the beginning of summer. pic.twitter.com/ErHjGIahlL— Ling (@xumeiling15) September 2, 2022
Well, the king coin’s correlation with the S&P500 is important because it makes it easier to predict Bitcoin’s behavior with regard to economic policy. A perfect example of this is the bearish performance this week.
It happened after the Federal Reserve chair Jerome Powell’s remarks about the increasing interest rates. He highlighted the need to increase quantitative tightening to mob up inflation and the S&P500 reacted with some downside.
<p lang=«en» dir=«ltr» xml:lang=«en»>⚠️BREAKING:*DOW, S&P 500 CLOSE HIGHER AS STOCKS SNAP 4-DAY LOSING STREAK TO START SEPTEMBER
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