Bitcoin’s correlation to the S&P 500 may not be a good thing, but these metrics suggest that the bull case is growing stronger than ever. Covered: S&P 500 vs. Bitcoin From A Technical Perspective Stepping Back From The Technicals It’s popular to be a bear right now in the cryptoverse, and typically that kind of […] The post S&P 500 Signals End Of Bitcoin Correction; Bull Rally Is Imminent, Says Analyst appeared first on CryptosRus.

S&P 500 Signals End Of Bitcoin Correction; Bull Rally Is Imminent, Says Analyst

Bitcoin’s correlation to the S&P 500 may not be a good thing, but these metrics suggest that the bull case is growing stronger than ever.

Covered:

  • S&P 500 vs. Bitcoin From A Technical Perspective
  • Stepping Back From The Technicals

It’s popular to be a bear right now in the cryptoverse, and typically that kind of sentiment signals that a bottom is near. With not much bullish technical analysis out there these days, it’s refreshing to see one technical analyst making the contrarian case for another Bitcoin bull rally. He’s pulled out some interesting correlations to the S&P 500, and it might just prove that Bitcoin is ready to rebound.

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S&P 500 vs. Bitcoin From A Technical Perspective

The technical analyst Aurelien Ohayon is one of the only Bitcoin TA guys left out there, and he’s finding some very interesting correlations between Bitcoin and the S&P 500 (SPX). Let’s break down what he’s seeing so you can decide whether you agree or not with the bull case being made.

“At every BTC blow-off top, the 2W-CMO (Chande momentum oscillator) of #SPX makes Higher Highs before the final Blow-off, while it does not make any Higher Highs before BTC’s last Rounding top.

It is the SPX wave structure strength that determines that of BTC.”

Before digging into what we’re looking at, let’s first take note of an interesting higher-level observation. The S&P500 (underneath Bitcoin price action) appears to be climbing in a steeper and steeper fashion, which falls in line with the exponential rate of our technological innovation over the past decade. The Chande Momentum Oscillator also reflects the increase in momentum, as it’s printed steeper higher lows throughout the past three bull cycles.

As noted by Ohayon, each breakdown of the SPX tend to line up with a much larger Bitcoin correction following its local tops in the market cycle. Now, we can note that Bitcoin bull rallies end after blow-off tops correlated with a higher high in the CMO, but when looking at the two-week CMO today, it has failed to create a higher high, which corresponds with the rounding top we saw in Bitcoin about one year ago. Now that the CMO has fallen back down and created another local low (as indicated in green), it may just be telling us that not only is the S&P 500 ready to rally again, but so is Bitcoin.

What makes Ohayon’s analysis unique is how he pairs two separate assets together with indicators from each. So rather than showing Bitcoin’s price alongside its own stochastic relative strength index (RSI), Ohayon showcases another interesting correlation between the Bitcoin price chart paired with the S&P 500 Stochastic RSI.

“When the Weekly Stochastic RSI K-line of the S&P500 leaves the blue zone, a BTC bottom has been reached, followed by a huge bull run. The bottoms of 2011, 2015, 2018, 2020 were found. 

It just left the blue zone.”

Bitcoin’s correlation to traditional finance can be a good thing when traditional markets turn bullish again. And as pointed out by Ohayon, the S&P 500’s weekly Stochastic RSI just left the “blue zone” again, which typically correlates with a strong bounceback in stocks. We’ll just have to see if history repeats itself once more.

Lastly, zooming in a bit closer to today, let’s look at Bitcoin and the S&P 500 from a more straightforward TA perspective, side by side.

Both structures are forming bullish descending broadening wedges, which when retested from the upside, typically lead to further price appreciation. The relative strength index (RSI), which measures the overbought and oversold conditions of an asset, also just happens to be forming progressive higher lows. Bullish? Or just a fake-out?

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Taking A Step Back From The Technicals

We are at a quite pivotal time in the traditional and crypto markets alike. As inflation concerns grow by the day, paired with rising geopolitical tensions abroad and less money to spend for the average consumer, there’s an awful lot of reason to be bearish these days. However, when the majority of people see things in the market the same way, the market typically tends to humble them. We’ve seen major financial players all call for an impending recession, but it should make you wonder whether something so seemingly obvious is coming when it’s being shouted from the rooftops.

This doesn’t mean that a recession isn’t on the way for financial markets, but the timing of which it may come just might be what throws everyone off.

As discussed in previous posts, crypto market cycles are lengthening over time.

With the correlations between the S&P 500 and Bitcoin shown by Ohayon, it certainly makes one wonder why we haven’t seen further capitulation just yet. Despite all the bearish catalysts overhead, Bitcoin and crypto have been holding relatively strong for such a nascent asset class.

Is it possible that we have yet to see one more run-up in asset prices that inevitably causes the bubble to burst, leading the economy into a recession, or did the bubble burst last year, we just haven’t caught up to that realization yet? There’s certainly a case to be made for both sides, and only the future will reveal which view is correct.

The post S&P 500 Signals End Of Bitcoin Correction; Bull Rally Is Imminent, Says Analyst appeared first on CryptosRus.