Bitcoin (BTC) Awaits The Next S&P 500 (SPX) Move For Direction 

Bitcoin (BTC) awaits the next big move in the S&P 500 (SPX) after the important Super Tuesday results. The results show Joe Biden in the lead which is a good sign for Wall Street and we might see the markets rally today with BTC/USD rallying as well. So far, the index remains below the 200-day moving average. More importantly, it has yet to break past the 1.272 fib level which stands between the next uptrend and a continuation of the ongoing correction. It is important to realize that the index might rally in reaction to yesterday’s developments but we would need to see follow through to be sure that it is sustainable. 

For Bitcoin (BTC), this means the difference between $9,200 and $11,700. If it is short-lived, we can expect a return to the $8.2k zone, but if it is not short-lived, then $11.7k would be on the table which in my opinion is the last stop before the beginning of the major downtrend. It is extremely unlikely for BTC/USD to rally past $14k under these conditions. The most probable scenario is the beginning of a major downtrend after this move is complete. The same goes for the stock market. We have already seen signs of weakness and the recent Joe Biden victory might induce some bullishness in the market but it is not likely to last for long. 

The 4H chart for BTC/USD shows that it is trading in a descending broadening wedge. This wedge could easily see the price decline down to the $8.2k zone should it fail to find support on the 38.2% fib level. In other words, BTC/USD is trading in tandem with the stock market and is technically ready for both possibilities. In my opinion, a rally towards $9,200 is quite likely at this point. 

If the S&P 500 (SPX) climbs above the 200-day moving average and breaks past the 38.2% fib resistance, we could expect BTC/USD to rally further towards $11,700. However, it is important to realize that any such rallies would be short-lived and would lead to further downside in the weeks and months that follow. The near-term outlook of Bitcoin continues to depend on the outlook of major markets. The next move in the stock market would determine where BTC/USD trades in the weeks to come. For now, it is reasonable to say that as long as BTC/USD trades above the 200-day moving average the bulls have nothing to worry.