Bitcoin defies macro environment to surge above $20,000
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Loading... - Vanessa Davis
- 07 Oct 2022
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Flagship cryptocurrency asset, Bitcoin, seems to be defying all known laws of gravity as it rallies back above the $20,000 trading zone, effectively turning resistance to support. This has gotten cryptocurrency enthusiasts excited about the month of October, usually termed, “Uptober,” because the asset and the market have historically performed positively during the month.
The current rally is bringing Bitcoin’s price above a long-term descending trendline that stretches all the way back to April 22 or last November, depending on one’s style of technical analysis. In reality, BTC price simply “consolidated” its way through the trendline by trading in a sideways manner where the price has been range bound between $18,500 and $24,500 for the past 114 days.
This newfound rally has some traders feeling a bit celebratory now that the price trades outside of the descending trendline. However, it is important to note that the rally comes with little to no relevant metrics or macro factors changing, which is not enough to support a bullish point of view for Bitcoin price at the moment.
Macro analysis
§ Direction-wise, there has been a significant level of correlation between the cryptocurrency market and the equity market as cryptocurrency assets like Bitcoin and Ether tend to trade in tandem with equities. The recent rally in Bitcoin’s price to close yesterday at $20,365 comes as the Dow, S&P 500 and Nasdaq closed the day with 2% to 3% gains.
§ As a reminder, it is important to remember that short-term price action is not necessarily reflective of a more significant trend change. On this, Coin Metrics explained, “Correlations among BTC, ETH and with the S&P 500 have increased recently as the benchmark index fell in price to 3600, which had not been breached since December of 2020.” Read More…
