The S&P 500 Index (SPX) has now fallen below the 50 day moving average and seems to have formally started a new downtrend. In the past few months, we have seen BTC/USD closely follow in the footsteps of the S&P 500. This is because no matter what some overly enthusiastic Bitcoin (BTC) bulls might have you believe, it continues to be a highly speculative asset and if the stock market is going down, BTC/USD is going down with it, unlike Gold. The daily chart for the S&P 500 Index (SPX) shows that in the past few weeks, the index has been throwing mixed signals as to whether it intends to remain above or fall below the 50 day moving average. Temporary hopes of a new bull trend in the S&P 500 in the past few days seem to be the reason why we saw BTC/USD on a roll.
Now that the index has declined above the 50 day moving average we have seen the rally in Bitcoin (BTC) come to a standstill. What’s more bearish than this is that the S&P 500 Index (SPX) is likely to close its first week below the 21 week exponential moving average for the first time since February. On the EUR/USD front, the Dollar (USD) is poised for a big rally against the Euro. This might coincide with the situation with China heating up. Its effects will be felt on the dollar, the stock market as well as Bitcoin (BTC). The S&P 500 Index has been long overdue for a decline and it seems to have finally begun its downtrend. This is the downtrend we have been expecting for a while and we expect it continue all the way till October, 2019. During this time, we might see the cryptocurrency market experience maximum pain as Bitcoin (BTC) will go down and a lot of altcoins will be wiped off the market.
Bitcoin (BTC) has hit a wall as the price is trading within a large ascending wedge. This wedge will see the price break downwards eventually. We might see BTC/USD rise towards $9,000 or even $13,000 short term but that does not change the fact that the price is going to top out here and come down towards lower levels in the near future. The price of Bitcoin (BTC) faced a strong rejection at the 38.2% fib retracement level during the last cycle. There is a high probability that the price might touch this level and start falling sharply as a lot of big sellers would be waiting to sell at that level.
We have already seen a big flash crash to $8,200 on Kraken which better explains what is going on. Insiders are trying to cash out as they realize that not many retail bulls are likely to get trapped in here at this point. These retail traders need a dip so they can FOMO back into the market. There are some of them expecting a rally to $10,000 before they sell any coins and the whales know it which is why it may never happen. We are more likely to see the price crash below $8,000 in the next few days. After that the market makers might present the retail bulls some opportunities to buy the dip as they systemically dump on them.