Bitcoin (BTC) is under significant pressure after experiencing a considerable 14% retrace from $65,103 to $55,602. This downturn is happening amidst a climate of fear and uncertainty impacting each the cryptocurrency and US stock markets.
Recent data from Santiment highlights a notable shift: Bitcoin is becoming progressively less sensitive to fluctuations in equities. This means that while each markets grapple with volatility, their interactions will not be as intertwined.
As we move forward, price motion could be influenced more by its market dynamics moderately than broader stock market trends. This shift could mean that, despite ongoing volatility, the basic correlation between US stocks and BTC might diminish, resulting in a period where BTC’s movements are increasingly driven by internal aspects moderately than external market influences.
Bitcoin Correlation With Stocks Changes
Yesterday, the US stock market faced a difficult day, with the S&P 500 recording its third worst-performing day of 2024. In accordance with a report from Santiment shared on X, the S&P 500 dropped by 2.16%, reflecting ongoing market struggles.
In contrast, BTC experienced a comparatively mild decline of 1.82%. This contrasts sharply with BTC’s more severe drop throughout the August 4th market turmoil, when the S&P 500 plummeted by 3.00% and BTC fell by 7.16%.
Santiment’s recent chart reveals an intriguing shift in Bitcoin’s correlation with the stock market. Previously, BTC’s correlation with equities had fluctuated from negative to positive and is now approaching a neutral stance.
This evolving dynamic suggests that BTC is becoming less sensitive to movements within the stock market. Such a shift indicates a possible strength for BTC, because it demonstrates resilience against broader market pressures.
If this trend continues, it could signal a period where Bitcoin’s price movements are driven more by its market aspects moderately than by fluctuations within the stock market. This may lead to a possible recovery for Bitcoin, no matter ongoing volatility in equities.
Investors might interpret this as a positive sign, suggesting that Bitcoin could decouple from traditional market influences and pave the best way for more independent price actions in the longer term.
BTC Price Motion Driven By Uncertainty
Bitcoin (BTC) is trading at $56,531 after setting a recent weekly low of $55,602. As the worth continues its downward push, bulls must prioritize a recovery above the 4-hour 200 moving average (MA), which is $59,684.
This moving average has proven to be a big short-term resistance level over the past month. Reclaiming the $60,000 psychological level can be crucial in reversing the present negative sentiment and attracting liquidity to shift the trend positively.
Nevertheless, if BTC fails to shut above $56,000, it risks an extra decline. In such a scenario, the following support level to look at can be $54,568. Failing to carry above this level may lead to more bearish pressure and test even lower levels.
Monitoring these key levels will likely be essential for determining the following direction for Bitcoin. The market’s ability to reclaim and sustain levels above these technical indicators will likely be critical in shifting the present trend and restoring bullish momentum.
Featured image from Dall-E, chart from TradingView