Biggest Bitcoin Bull Trap In The Making

The price of Bitcoin has seen some minor retracements here and there but it seems ready to shoot towards $8k and potentially higher than that towards $8.4k-$9k to fill the CME Futures gap in the wake of Bitcoin halving. We would once again see a large number of retail bulls get overly excited and this time, they might be walking into the biggest bull trap in Bitcoin history. While we know that BTC/USD is printing a major bear flag which is very likely to lead to a major decline in the weeks and months ahead, we also know that this time certain conditions might be different.

When Bitcoin came into inception in 2009, the stock market was just beginning of its biggest uptrends. That uptrend last until now and during this whole time Bitcoin has had uptrends and bear trends but both the stock market as well as Bitcoin have been in long term bull markets. This would be the first time for the S&P 500 (SPX) to enter a bear market since the financial crisis of 2008-09. For Bitcoin, this might therefore be the first bear market in its entire history. This should serve as a stark warning to the overly enthusiastic Bitcoin enthusiasts that are putting their savings into cryptocurrencies thinking the market is going to rally because of halving.

We have seen multiple times how significant downtrends in the stock market have led to the same in the cryptocurrency market. Yet a lot of crypto enthusiasts refuse to believe that there is a correlation between Bitcoin and the stock market. For now, as halving nears, it is even easier for them to ignore that correlation but they are going to find out the hard way. The Dollar Currency Index (DXY) remains in an uptrend. If we see a US-Iran war this year which is possible especially if the Coronavirus situation ends up hurting President Trump’s approval ratings, it is going to rise even higher and WTI Crude Oil (USOil) might also begin an uptrend around the same time. That would be devastating for the stock market but it would be even worse for the cryptocurrency market.