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S&P 500 Just Printed a Textbook Bull Signal: Here’s Why Bitcoin Can Benefit

Nick Chong

Nick Chong | Jul 20, 2020 | 10:00

Bitcoin Price

S&P 500 Just Printed a Textbook Bull Signal: Here’s Why Bitcoin Can Benefit

Nick Chong

Nick Chong | Jul 20, 2020 | 10:00


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  • Bitcoin is trading up 0.2% while the S&P 500’s futures are trading down 0.4%, as of this article’s writing.
  • Despite the slight drop, the index remains in a textbook bull pattern primed to end in a strong upwards breakout.
  • BTC may benefit from this breakout in the S&P 500 due to the strong correlation that has formed between the two markets.

Unlike Bitcoin, the S&P 500 is starting its week with a slight move to the downside. As of the time of this article’s writing, the leading U.S. stock index’s futures have printed a -0.4% candle during the pre-market session.

While this is not a move not welcomed by bulls, the index purportedly remains in a textbook bull pattern primed to push stocks higher. This is bullish for Bitcoin due to the correlation that has formed between the markets.

Bitcoin Could See a Strong Rally as S&P 500 Prints Bull Sign

Despite the slight drop seen in the pre-market session, an analyst noted on July 19th that the S&P 500 remains in a macro ascending triangle.

An ascending triangle is often seen as a textbook bull pattern as they often break to the upside. These patterns are formed when an asset sees a series of higher lows but runs into the same resistance high multiple times.

S&P 500

Chart of the S&P 500 from trader Byzantine General (@ByzGeneral), a technician/markets analyst. Chart from TradingView.com

Should the S&P 500 break above the highs of the triangle, it will likely be primed to move to a new all-time high.

Bitcoin is poised to benefit from this potential breakout as it has become increasingly correlated with stocks over recent months. Take Charles Edwards’ tweet below as an example: the digital asset manager’s chart shows that the two markets have traded in tandem on multiple trading sessions over the past four months.

Should this continue, Bitcoin will break higher as the S&P 500 does.

One trader, in fact, has suggested that should the S&P 500 make a new all-time high in the near future, BTC is likely to cross $10,500 for the first time in around a year.

The Correlation Has a Silver Lining

While some have seen Bitcoin’s correlation with the stock market as a bad signal for adoption and the asset’s narrative, this may not be the case.

Qiao Wang, a prominent cryptocurrency trader,  recently said that the correlation may boost the value proposition of BTC. This may seem counter-intuitive, but let him explain:

“The stock-crypto correlation is the most annoying thing from a portfolio PoV. Diminishes the marginal benefit of owning stocks. Maybe should dump stocks and just hold gold+BTC.”

He added that in a world where there is extremely high inflation, stocks will only make it to a point before their value is decimated.

Featured Image from Deposit Photos
Price tags: xbtusd, btcusd, btcusdt
Charts from TradingView.com
S&P 500 Just Printed a Textbook Bull Signal: Here's Why Bitcoin Can Benefit

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