Most of us are probably aware of the correlation that exists between BTC and the Stock Market - more details HERE.
This correlation however is very much impacted by BTCs volatility - which means BTC rises faster and falls sharper than stocks, even if the direction of the move is similar.
One interesting chart too look at is the BTC/NAS100 ratio, which follows strength and weakness between the two asset classes. Usually during bull markets BTC tends to trump NAS100 gains, while during bear markets this goes the other way around.
Currently we are sitting inside a long term wedge created by the lows of 2018 and 2020 and the highs of 2021. And during the last 2 years we haven't broken out of this wedge.
At this time BTC is knocking on the upper edge, but the pattern it is forming (several weeks of flirting with this area) suggests it will act as resistance once again.
Considering that the start of the year brought some downside in the stock markets, if this downside continues it could drag BTC along with it as long as the correlation remains.
In the long term I do expect BTC to break to the upside - a moment which would mark for me a clear confirmation that the bull market has started, BTC outperforming stocks significantly being a clear indicator of that.
For now I am taking note of this chart and placing my bets on some downside in BTC over the next period, looking to reverse my bets when we reach the yellow area of support. Do note that once a resistance area has been broken we've retested this area once before moving up more, something which hasn't happened yet.
This correlation however is very much impacted by BTCs volatility - which means BTC rises faster and falls sharper than stocks, even if the direction of the move is similar.
One interesting chart too look at is the BTC/NAS100 ratio, which follows strength and weakness between the two asset classes. Usually during bull markets BTC tends to trump NAS100 gains, while during bear markets this goes the other way around.
Currently we are sitting inside a long term wedge created by the lows of 2018 and 2020 and the highs of 2021. And during the last 2 years we haven't broken out of this wedge.
At this time BTC is knocking on the upper edge, but the pattern it is forming (several weeks of flirting with this area) suggests it will act as resistance once again.
Considering that the start of the year brought some downside in the stock markets, if this downside continues it could drag BTC along with it as long as the correlation remains.
In the long term I do expect BTC to break to the upside - a moment which would mark for me a clear confirmation that the bull market has started, BTC outperforming stocks significantly being a clear indicator of that.
For now I am taking note of this chart and placing my bets on some downside in BTC over the next period, looking to reverse my bets when we reach the yellow area of support. Do note that once a resistance area has been broken we've retested this area once before moving up more, something which hasn't happened yet.