• The crypto market and Bitcoin are currently in the red; Bitcoin has fallen below USD 9,000 at the time of writing.
  
• The short-term trend appears bearish, with the correlation to the equity market once again a driving factor behind the slump.

After last Thursday’s crash, Bitcoin (BTC) and the entire crypto market showed a sideways trend. Neither bulls nor bears seemed to agree on how things will continue after the renewed failure on the USD 10,000 mark and the subsequent crash. At least in the short term the bears have now gained the upper hand and pushed the Bitcoin price down to USD 8,990 at the time of writing.

As CNF reported yesterday, the important support zone above the $9,172 level based on IntoTheBlock on-chain data was breached. This also coincides with the technical analysis of the trader “Credible Crypto” on Twitter. The analyst showed the chart below and explained that after the channel failed to hold between $9,800 and $9,900, he expected the support zone below $9,200 to be retested, which is currently being observed. However, he does not expect a major correction until the second support zone drops above $8,800:

Testing our first support level once again after re-testing the lost channel above us and failing to reclaim it. If this level is lost I expect the second support level to come into play. Only if THAT level is lost will I consider a larger correction potentially at hand.

However, another anonymous trader on Twitter found four reasons why Bitcoin could continue its downward trend. “Crypto Hamster” described the breakout to $10,400 on June 2nd as a “false breakout” and said that the diagonal support has now been converted into a resistance. It also cited the following reasons for its bearish position:

daily time frame:
– triangle finally has been broken to the downside on higher volume
– diagonal support has turned to a resistance, and price got rejected from it – Bollinger Bands base line got broken
– 50MA held at the first test, but got tested again

What is striking about the current downtrend of Bitcoin is that it once again coincides with the downtrend in the stock market and especially that of S&P500. Since the outbreak of the coronavirus and the worldwide lockdowns, Bitcoin has followed the S&P 500 in its losses. Like Bitcoin and the entire crypto market, the S&P 500 suffered a significant drop last Thursday.

As CNBC reports, stock market experts expect a weak opening of US stocks today, Monday. According to CNBC, analysts believe that the downward trend is driven by investors’ fear of a second wave of coronavirus, amidst a slowly recovering economy. Ed Yardeni, President and Chief Investment Strategist at Yardeni Research told the news portal:

Now that we’re in the trillions, the deficit just simply has to have a positive impact on the price of things not quantitatively-easable — stocks, real estate, cryptocurrency relative to the price of money. Said another way, the BTC/USD cross-currency rate will rise. The price of bitcoin may set a new record in the next twelve months.

Although the short-term forecasts are rather bearish, the long-term fundamentals of Bitcoin remain optimistic. The monetary policy of central banks worldwide is unanimously described by many analyses as the driving force.

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