Market Update: Crypto Pulls Back As $SPX Reaches New Highs

Crypto Pulls Back As $SPX Reaches New Highs

$SPX

The equity market has had an incredible run this past week. However, the sequential indicator will reach a green 9 on Monday which is a warning signal for the bulls that the trend may be overbought. As you can see from the chart above, the $SPX has pulled back several times when reaching a green 9 at the peak of a previous trend. Being said, it is possible that a breakout above March highs could trigger even more bullish price action. However the trend is already significantly overbought.

$VXX

The fear index will also be reaching a red 9 tomorrow, which is a warning signal for the bears that the trend is oversold. The VXX typically acts as a counter indicator to the $SPX and equity market. For instance, the $VXX is a good way to hedge a macro portfolio considering its outstanding performance during March and other periods of massive fear and sell pressure.

Correlations

The correlation between Bitcoin and the Stock Market has been coming back, therefore, it still seems likely that it would be difficult for Bitcoin to rally in the midst of a significant Stock Market selloff.

Bitcoin – Gold Correlation

It is very promising to see the increased correlation between Bitcoin and Gold which has occurred recently. While this correlation is recent and has yet to be proven in the long term, it is evident that more and more individuals are looking to Bitcoin as a scarce resource and preservation of wealth in the midst of excessive quantitative easing and monetary stimulus.

Bitcoin Pulls Back

After a retest of $12k, Bitcoin has pulled back to a price of roughly $11.5k. As of now, $11.5k has proven to be sufficient support for the bulls with $11.2k as the next key  level. It is interesting to note that Bitcoin’s technicals are currently bullish – neutral, while altcoins such as $ETH, $XMR, & $ZEC, are all providing sell signals from the sequential indicator. In fact, Ethereum has already started to pull back after topping on a green sequential 9.

Conclusion

Bitcoin’s technicals and fundamentals continue to be bullish with support at $11.2k. While it is not proven long term, we will continue to monitor the correlation between Bitcoin and Gold as fixed supply assets which combat inflation. However, Bitcoin may still be at the mercy of a steep equity market correction. Either way, one thing is certain: next week will be interesting for Gold, Bitcoin, and the Stock Market.