empty
03.06.2022 12:47 PM
Bitcoin still afloat

Bitcoin does not generate interest income like bonds. It does not make dividends like stocks. Against the backdrop of the cryptocurrency market capitalization surging 19-fold from March 2020 to November 2021 to $2.9 trillion, its leader was interesting as a fast-growing asset. Its high volatility also attracted attention. However, the ensuing winter-spring sell-off, followed by a consolidation near $30,000, caused BTC to lose its appeal. To the delight of its fans, it survived. This is already good news and a reason to speculate about the outlook.

As an asset that does not bring interest and dividend earnings, Bitcoin is more like gold. Precious metal has intrinsic value, and its reserves are limited in nature. It is not for nothing that a process such as capital spillover from the gold market to the cryptocurrency market is used to justify the fall of the XAU/USD pair. These are similar assets, but investors perceive the token as a risky instrument. This can explain its high correlation with the Nasdaq Composite. By the way, this correlation decreased for a while as the US market grew, encouraged by rumors of a September pause in the Federal Reserve's rate hike cycle, while the BTC/USD pair has long recovered amid the panic caused by the stablecoin crash.

BTC and gold price change

This image is no longer relevant

The reasons for the deterioration of the correlation were cited as the outflow of some major players from the cryptocurrency market, as well as the industry specifics of the exchange rate of the index of technology companies. However, the correlation soon recovered, allowing us to return to the topic of speculation about the future of Bitcoin considering the US stock market.

The latter has much to worry about, including a slowing US economy, aggressive tightening of the Fed's monetary policy, and worsening corporate reporting. Nevertheless, excessive pessimism can eventually turn to growth. The American Association of Individual Investors conducts a weekly survey showing what to expect from the market in the next 6 months. When bears outperform bulls by more than 30 pips, it can mean the worst times are over.

US Investor Sentiment, % Bull-Bear Spread

This image is no longer relevant

According to Bloomberg experts, the flagship cryptocurrency may reach a low point in the near future. However, DailyFX does not advise buying it until the price rises above $40,000.

On the daily chart, the BTC/USD pair began to implement the bearish pattern, which we discussed in the previous article. Nevertheless, bulls did not have enough strength to move the pair above the pivot level of $32,300. Currently, the blue pattern of the Widening Wedge may be formed. This requires the asset to hit a new low, the formation of the point 4 with the subsequent growth above $29,500, which will be the reason for opening long positions on Bitcoin.

BTC/USD, daily chart

This image is no longer relevant

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

Has Common Sense Prevailed? (High probability of #SPX growth and a drop in gold prices)

On Monday, the United States announced "significant progress" in trade talks with China following a two-day meeting in Switzerland over the weekend. Markets reacted to this news with a gap-up

Pati Gani 11:00 2025-05-12 UTC+2

GBP/USD. An Important Week for the Pound

The GBP/USD pair is again under pressure due to the broad strengthening of the U.S. dollar. Last week, the pound attempted to break into the 1.34 zone in reaction

Irina Manzenko 10:49 2025-05-12 UTC+2

The Market Will Face Reality

How quickly things change on the financial markets! Before America's Liberation Day, investors viewed the 10% universal import tariff as disastrous. Now, it's seen as the most favorable option

Marek Petkovich 09:18 2025-05-12 UTC+2

What to Pay Attention to on May 12? A Breakdown of Fundamental Events for Beginners

There are no macroeconomic events scheduled for Monday. Fundamental developments will also be limited, but at this point, it is entirely unclear which factors are influencing price formation. The pound

Paolo Greco 06:51 2025-05-12 UTC+2

EUR/USD. Weekly Preview. Prepare for Price Turbulence

The upcoming week promises to be volatile. First, the market will react to the results of the Geneva meeting between representatives of the US and China. Second, key reports

Irina Manzenko 05:34 2025-05-12 UTC+2

GBP/USD Overview – May 12: Business as Usual...

The GBP/USD currency pair moved slightly higher on Friday, although the British pound had no real reason to grow that day or throughout the week. Let us recall that

Paolo Greco 03:48 2025-05-12 UTC+2

EUR/USD Overview – May 12: The Dollar's Success Is Unstable

The EUR/USD currency pair slightly rebounded upward on Friday, and overall, it has been gradually sliding down for several weeks. The movement has been so sluggish that we recently classified

Paolo Greco 03:48 2025-05-12 UTC+2

US Dollar. Weekly Preview

The U.S. economic calendar for the upcoming week won't be overloaded with data. If we leave out the secondary reports, only April's Consumer Price Index (CPI) remains, which will

Chin Zhao 00:59 2025-05-12 UTC+2

British Pound. Weekly Preview

The wave pattern of the pound and the market's interest in the news currently reflect those of the euro. Last week, the market had a chance to reduce demand

Chin Zhao 00:59 2025-05-12 UTC+2

Euro Currency. Weekly Preview

Will the news background have any real significance in the upcoming week? In my opinion, the market seems largely uninterested in economic and fundamental data. Consider this: major events like

Chin Zhao 00:59 2025-05-12 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.