[ad_1]
Tech equity indices, including the Nasdaq Composite and the S&P 500, have begun to recover. Amazon experienced high pandemic sales that resulted in profits tripling and a 37% increase in revenue. Facebook also surpassed Wall Street expectations, hitting $ 21.5 billion in revenue during the third quarter.
Although the correlation between Bitcoin and US equities has declined in recent weeks, the likelihood that the growing risk sentiment in the market could support BTC remains high. Like Kevin Svenson, graphic designer at Kraken’s Cryptowatch, explained, the direction of the market between Bitcoin and the S&P 500 is “the same 80% of the time”.
As such, Svenson mentioned that correlation would likely return: “The only other week in 2020 with a lack of correlation was at the bottom of the Global Pandemic Collapse when #Bitcoin rallied before the S & P500. Remember,” correlation “shouldn’t be calculated based on to gain or loss%. We are talking strictly about the direction of the market. Upward trend or downward trend. “
The US stock market entered earnings season after weeks of stagnation. Historically, the earnings season has been starkly positive for equities, serving as a short-term catalyst. This could place Bitcoin (BTC) in a unique position as it rallied throughout October, despite the plunge in US stocks. If risk-on assets start to see upward momentum, there is a chance it could positively affect BTC.
If Bitcoin begins to show some correlation with the S&P 500 again, the positive earnings season met with strong performance from Big Tech could further fuel Bitcoin’s momentum. However, there is some evidence to support the opposite.
Bitcoin to remain unaffected
Denis Vinokourov, head of research at cryptocurrency exchange and broker Bequant, told Cointelegraph that the gains generally support the US stock market, but the latest earnings season could have little effect on overall market sentiment. He said the U.S. presidential election on November 3 has become a more important macro factor, which could diminish the importance of earnings, adding:
“Markets are now in the middle of the third quarter and despite the global slowdown in the wake of the covid-19 pandemic, 85% of companies have so far exceeded expectations by an average of 19%, which is well above the historical average. between three and five percent. However, what markets tend to focus on is not just key earnings data, but driving as well, which, given the limited visibility amid the aforementioned pandemic, has been somewhat muted. ” .
Vinokourov also pointed out that Bitcoin could retreat in the short term, noting that if Bitcoin increases in October due to the uncertainty surrounding the elections, the post-election cycle could cause BTC to melt. Since October 1, Bitcoin has gone from $ 10,775 to over $ 13,300, peaking at $ 13,859 on October 28.
A mild retreat or consolidation phase in the short term is also likely, as $ 13,875 has acted as a multi-year area of resistance since 2018. Vinokourov suggested that “If you go from the narrative that the uncertainty over the US elections was one of the main driver advantages, so by default the resolution should lead to some relaxation and therefore some disadvantages. “
Guy Hirsch, chief executive of the US region at the eToro trading platform, told Cointelegraph he doesn’t see earnings season significantly impacting Bitcoin. Hirsch noted that the US stock market would not have a major impact on BTC:
“So far, the earnings season has been overwhelmingly positive for the markets, with a significant number of companies exceeding estimates and likely limited the risk of a total downside to a mass sell-off, at least for now. That said, the correlation between Bitcoin and stocks has largely broken in recent weeks and I am unable to see how the gains could affect BTC in the foreseeable future. “
Another metric that indicates a declining correlation between Bitcoin and US stocks is the network value to transactions ratio of Bitcoin, or NVT, the price ratio. The NVT price calculates the value of Bitcoin based on its market price and the amount of BTC transferred to the blockchain on a daily basis. Bitcoin’s NVT price also saw a drop in correlation with the S&P 500, as chain analyst Willy Woo reported.
A small pullback may occur, but the momentum is too strong
Since it peaked at $ 13,859, the price of Bitcoin has fallen by around 4% over the past three days. The decline coincided with a decline in stablecoin inflows, indicating lower demand from buyers. Over the same period, stock market inflows increased, demonstrating intent to sell by potentially high net worth retail and individual investors.
However, Hirsch pointed out that he doesn’t believe a drop to $ 12,000 is likely, as Bitcoin’s “upward momentum” is simply too strong, with fundamentals supporting it. Bitcoin has seen unexpected price swings in the past, especially during bull markets. Volumes, open interest and overall trading activity increase, increasing the likelihood of short-term volatility spikes. However, Hirsch said that Bitcoin’s current upward trend is different from past cycles.
Over the past month, PayPal has integrated the buying and selling of cryptocurrency. This was followed by the comparison between Bitcoin and gold from JPMorgan Chase and Avanti, a bank focused on digital assets, which received a bank card. Given Bitcoin’s growing institutional adoption, high network hash rate, and growing daily transaction value on the Bitcoin blockchain, Hirsch suggested that a major withdrawal is unlikely in the near term, as “This rally is different from the 2017 ICO. run up “, adding:
“If COVID were to continue to grow and stimulus wavered in the wake of a disputed US election, it would make sense that Bitcoin adoption would continue to rise (thus, driving up prices) relative to the BTC being sold.”
Technically, Bitcoin’s higher time charts also show neutral market sentiment in the short term. The daily chart shows that BTC has been trading above the short-term 10-day moving average, despite the decline from $ 13,876. As long as Bitcoin’s price remains stable above the key support levels of $ 12,700 and $ 13,000, BTC’s overall technical uptrend remains intact.
[ad_2]Source link
