After the consecutive declines in the global markets, investors continue to heal their wounds. At the time of this writing, Bitcoin is pushing its support at the $30,000 level. Investors are waiting for the right moment to enter, describing the declines as an opportunity. However, the facts may not be so innocent.
Unfortunately, the bad trend in American indices also affects cryptocurrencies due to its high correlation. There are some technical indicators that will carry this bad trend even further. The structure formed by the averages on the S&P500 and Nasdaq side is ringing the alarm bells for cryptocurrencies and especially Bitcoin
The chart below is for the S&P500 index. The green one shows the 50-week average and the red the 200-week average. Whenever the index goes below the 50-week (green) average, there is usually a slump up to the 200-day average.
It can be seen that this structure was formed 3 times before and then a collapse in the index was experienced. In the last case, it is seen that a similar structure has formed again. The price, which goes below the 50-week average, can make a hard landing towards the 200-week average. We’re talking about a massive drop of about 15%. If this happens, the repercussions of the decline will be felt in all markets.
Especially recently, the bad news and increasing risks cut off the upward momentum in the index. The index, which cannot go higher, seems to have turned its direction downward.
Bitcoin In The Mouth Of The Ball
Danger bells are ringing for Bitcoin, which has not fallen below the $28,000 level since the beginning of 2021. Its recent increasing correlation with the S&P500 is making things worse for Bitcoin. Investors and stakeholders of the cryptocurrency market are unfortunately not ready for such a scenario. If the price goes below $28,000, investors will stop taking risks with stop-losses.
$BTC It will retest the blue level. Major support level. If it breaks, it means that the market perception has changed. #BTC pic.twitter.com/KdtEas5gRa
— Furkan Bozkurt (@BzkrtFrkn) May 9, 2022
Therefore, there may be difficult days for the leading crypto money and the altcoins that are connected to it. If you are satisfied with the analysis, you can follow my posts on Twitter and Telegram.
You can check the price movements here.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, KoinFinans and the author of this content cannot be held responsible for personal investment decisions.