Bearish S&P 500 (SPX) Outlook Suggests Bitcoin (BTC) May Have Topped Out 

The S&P 500 (SPX) has turned very bearish after yesterday’s close below the 50-day exponential moving average. This has investors worldwide very concerned so much so that President Trump once again had to tweet about the stock market saying that the Coronavirus situation is under control and that the “stock market is starting to look very good to me!”. The daily chart for S&P 500 (SPX) is self-explanatory and in my opinion, there is nothing “very good” about it. There is a clear rejection at the 1.618 fib retracement level as well as the trend line resistance. The index closed below the 50-day moving average and now risks further downside as Coronavirus concerns grow. 

It is important to note that most of the recent declines in the S&P 500 (SPX) have led to similar declines in the stock market. This is no longer something we have to speculate on as there are well established patterns. Considering that the index has closed below the 50-day EMA, we could soon see the cryptocurrency market catch up with it and decline similarly down to $9k or lower. The past few days have made it clear that the price of Bitcoin (BTC) could crash by $1,000 or more in a matter of minutes. There is therefore no reason to hope and pray that the market will go up from here in light of the bearish outlook of global markets. If the stock market declines again today, we could be looking at a similar decline in the cryptocurrency market within the next few days. 

Bitcoin (BTC) may at times behave as if it is a standalone asset immune to the effects of the rest of the markets but that is something that doesn’t hold for long. It is only a testament to the level of manipulation in this market as the big players keep the prices high. It is in their interest that the market keeps on being bullish but it cannot do so for long when everything else is crashing. The staged correlation with gold is also not going to work this time when the stock market is declining. 

The 12H chart for BTC/USD shows that the price has been trading close to the 50 EMA and is now awaiting a decisive move. There is a clear rejection at the trend line resistance indicating that the price might enter a major downtrend now that it has broken past the fib circle. There is a very high probability that Bitcoin (BTC) might have topped out here and we could be looking at the beginning of a major downtrend. The fact that markets are beginning to react to the Coronavirus threat as well as the hype around Bitcoin halving suggests that the next market decline might be a lot more brutal as the big players try to catch retail bulls off guard and run their stops while getting out of their own positions at the same time.