Bitcoin Price Continues Falling With Seven Daily Red Candles – Bitcoin Magazine

Markets / August 6, 2022 / DRPhillF / 0

Below is an excerpt from a recent issue of Bitcoin Magazine Pro, Bitcoin Magazine Premium Markets Newsletter. To be among the first to receive these and other on-chain Bitcoin market insights straight to your inbox, subscribe now.

Bitcoin and S&P 500

In our latest monthly report, which focused heavily on the evolving macroeconomic environment, we highlighted the strong correlation between bitcoin and stocks over the course of 2020, while also referring to bitcoin as near 24/7/365, the inverse of VIX (currently). In general, this means that when you bid on stocks, bitcoin also got a boost; And when stocks are sold off (likely along with a higher VIX), Bitcoin will face downward pressure as well.

Market participants should remember that after the LUNA/UST internal crash, bitcoin had been consolidating around $30,000 for about a month before the stock market volatility increased as stocks plunged again, sending bitcoin down without major support. .

Generally speaking, when stocks are bidding, bitcoin gets a boost too

So what stands out in the current trend? Well, both markets have external variables that can affect the price and the historical correlations achieved. With stock bids continuing, as a result of negative flows and pressure on a delayed bearish situation, Bitcoin’s price action has begun to shift dramatically, with the derivatives market taking a short squeeze already.

Bitcoin is noticeably in the middle of its seventh consecutive red daily candle (closing price lower than opening price).

Bitcoin had seven consecutive daily red candles while the S&P 500 had a small uptrend

Given that stocks have been in a broader uptrend, the poor short-term performance worries bulls, as one must ask oneself where Bitcoin will trade if/when stock markets drop and/or old market volatility increases exponentially.

While this issue focuses less on long-term fundamentals and more on short-term price action, this is consistent with our broader market thesis that risky assets have not bottomed out, as covered in our July monthly report. A macro rules it all at the moment, and given Bitcoin’s still nascent niche as a mere puddle in the middle of a global ocean of total assets, the realized correlations and relative underperformance, respectively, are expected and noteworthy.