Bitcoin (BTC) with a 95% correlation to the S&P 500 index may be chasing traders this week, as one analyst warned that a 400 point drop could occur soon.
In the latest episode of her YouTube series „Trading Bitcoin“, Tone Vays focused on getting Bitcoin to align with stocks.
The expected „decoupling“ is in danger
The price of the BTC/USD pair fell on June 25 as markets lost heavily due to new concerns about coronavirus infection.
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Despite the bullish predictions for Bitcoin this week, the close correlation of the most important cryptomone currency with the stock markets was once again the focus of attention as downward pressure increased. At the time of this release, BTC/USD had avoided a drop below $9,000 to around $9,200.
Theories had long claimed that Bitcoin was „decoupling“ from the influences of the global economy until this week, even though the data shows similar degrees of correlation, particularly with the S&P 500.
With the increase in contagion, the markets were also concerned about the U.S. unemployment rate that was previously predicted, Bloomberg reported Thursday: 1.48 million per week.
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Vays sums it up:
„As I’ve been saying for months, I have no reason to walk away from my prediction earlier this year that Bitcoin will be stuck between $6,000 and $10,000 for most of this year.“
Vays predicts a minimum price of $7,000
On a technical level, what worried Vays was Bitcoin’s Relative Strength Index (RSI), while BitMEX’s funding rate was up on Thursday, which is generally against market indicators.
„Right now, the BitMEX funding rate is favoring the bulls, telling us that BitMEX traders are a little excited,“ he continued.
The RSI, which broke below a long term trend line in June, came at the same time that Bitcoin Billionaire price levels reached higher points compared to May, a remarkable divergence, says Vays.
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If the bears win, the minimum for BTC/USD should be in the $7,000 range, with an RSI of around 30, he added.
For stocks, the outlook was bleak: the absence of a firm support zone could cause the S&P 500 to fall by 400 points, or 12%, in case of a weak close.
Previously, different analyses warned that this month would set the stage for a massive stock market correction event.