The Bitcoin price is currently in a tug of war between the bulls and the bears as the price traded in a tight range between the $10,200 and $10,400 price region all week. This development comes after numerous unsuccessful attempts by the Bitcoin price to overcome the $10,500 key resistance.
However, that bullish price support at the $10,200 region might soon all fade away as fear and panic continue to rise among Bitcoin investors. This fear comes as the U.S stock market continues to experience weakness and massive sell-offs from the all time highs in both the S&P 500 and Nasdaq indices.
If this stock market sell-off persists, then there is a very high likelihood that we might see it affect the Bitcoin bullish sentiment and begin to drag the Bitcoin price down with it in the coming days.
Using The Growing Bitcoin, Stockmarket Correlation As A Leading Indicator
The growing correlation between the U.S Stockmarket and Bitcoin is a very great leading indicator to keep an eye on when it comes to understanding investors’ sentiment and risk appetite, especially during this time of growing macro uncertainties and rising unemployment rates.
A massive sell-off in the stock market like what we saw during the Covid-19 dump could serve as a warning signal to crypto traders. This way, traders can best position their portfolio to take advantage of the coming crash in the Bitcoin price.
However, it is important to note that this Stockmarket, Bitcoin correlation can only be used for long term analysis and has little to no effects on the short term daily price swings.
Important Levels To Watch For Short Term Trade Setup.
The Bitcoin price is currently trading sideways in a channel. And as far as the price remains within that channel, we can expect this tug of war between the Bulls and the Bears to continue.
However, a break past the $10,609 resistance level could signal the growing strength of the Bitcoin bulls and the resumption of the bullish trend. This could lead to a price surge back up to the $11,000 region or higher within days.
On the other hand, a break of the $9,942 support region could signify more weakness and a deeper retracement for the Bitcoin price in the coming days.
The first target to watch for the price to get to in this bearish bias would be the $9,600 CME gap a lot of Bitcoin traders have been talking about in the past few weeks.
A break below that level could see the Bitcoin price dumping as low as $9,000 or even $8,000.
To gain more information on how to partake in this coming Bitcoin Bull run and trade this cryptocurrency, you can read my How To Trade Bitcoin Guide. You can also check my top list of Best Bitcoin Exchanges To Trade With.