• Bitcoin continues to trade in a narrow range above USD 9,000. Due to the decreasing volatility, some analysts expect the Bitcoin price to drop again.
• Since last week the Bitcoin price has been correlating with the S&P500 again, so an impulse from the stock market this week could be decisive.

Since the beginning of May, the Bitcoin price has been struggling to reach the USD 10,000 mark. Except for three fleeting trips above it, which did not last very long, Bitcoin has not succeeded in overcoming this massive resistance. One factor that currently seems to prevent a further attempt is the lost volatility in the Bitcoin market. In the past few days Bitcoin traded in a range between USD 9,100 and USD 9,600.

The lack of upward momentum has led some analysts to predict that Bitcoin is facing a bearish move in the coming days and weeks and could slide back into the 8,000 region. The respected analyst Alex Krüger pointed out that the stock market could have a strong influence on Bitcoin this week.

If there is another sell-off in the equity market this week, Bitcoin could also suffer and fall into the lower $8,000 range. Should this support not hold, the range between USD 7,700 and USD 7,800 is of great interest, according to Krüger. At the same time, however, he also explained that this possible crash does not change the long-term bullish outlook for Bitcoin:

Having a look at $BTC technicals, I’d favor a move down to 8400-8100, back to the averages, prior to continuation higher. I’d buy that. Could see it early next week as equities push lower. The following area of interest is 7700-7800.

I’m still long and bullish bitcoin. I think it calls for patience. […] Largely unchanged since early May.

The correlation of Bitcoin with the stock market, especially the S&P500, which Krüger mentioned, was also pointed out yesterday by Charles Edwards of Capriole Investments. In March and April, Bitcoin and the S&P 500 traded with a close correlation due to the uncertainty surrounding the coronavirus. The crash, as well as the recovery of Bitcoin and the S&P 500, occurred simultaneously. This was followed in mid-May by the decoupling, which has now been reversed in the past few days, as Edwards determined:

Bitcoin & stock correlation in 2020. We have (sadly) “re-coupled” as of 10 June. Correlations at all time highs.

Notice the trend? High levels of fear and uncertainty (eg. VIX) = high levels of correlation.

The correlation with the stock market does not have to be a bad omen, though. As we have reported several times on CNF, many analysts see the “infinite money policy” of central banks, especially the US Federal Reserve (FED), as a strong positive influence on the stock market. However, while the money pump could only mean a short-term recovery for the stock market, this policy could reveal the long-term value of Bitcoin. Travis Kling of Ikigai Asset Management recently wrote about this:

A lot of folks have been asking why BTC isn’t higher right now. If you own #Bitcoin, just be patient. BTC has historically transferred wealth from impatient hands to patient. Just be patient. Central banks are doing all the leg work for you as we speak. Just be patient.

On the other hand, the analyst “Parabolic Thies” pointed out that a fall of Bitcoin to 8,900 or even 8,300 USD is an optimal entry opportunity. After that he expects a bounce above USD 10,000, which will turn the current resistance of USD 10,300 into support.

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