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

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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.

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.

Bitcoin & stock correlation in 2020.

We have (sadly) "re-coupled" as of 10 June. Correlations at all time highs.

Notice the trend?

High levels of fear and uncertainty (eg. VIX) = high levels of correlation. pic.twitter.com/rKPjXpdz73

— Charles Edwards (@caprioleio) June 21, 2020

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.”

https://twitter.com/QWQiao/status/1281382318343630848

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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