This may sound like a crazy question, especially because Bitcoin is said to have dissociated itself from the U.S stock market.
In fact, Bitcoin has shown some patterns in the past which suggest it has no link whatsoever with traditional markets. It has appreciated when stocks fell as demonstrated at the start of the trade war between China and the U.S.
However, S&P 500 indices are still correlated asset to Bitcoin according to Fundstrat’s Tom Lee. Last night, S&P 500 hit new highs of over $3,000 which is surprising as it has approached new highs days before now.
Its rise coincided with Bitcoin’s third highest gains in a single day in the price history of the asset. Bitcoin rose from $7,400 to $10,500 briefly before coming down to $9,000.
Will it happen again?
The question is therefore not so crazy, judging from the phenomenal surge which Thomas Lee said had to do with S&P performance.
He said Bitcoin performs best when S&P rallies. In a tweet, he said:
“+12% rally in #Bitcoin coinciding with strong equity day as S&P 500 nearing all-time highs…
– a reminder of the ‘unpopular’ opinion that the bitcoin performs best when S&P 500 rallies.
– best years Bitcoin when S&P 500 return >15%.
$BTC mostly retail, thus, mostly ‘risk-on’”
Also included in the prediction was $5,300 for April and $9,200 for July 2019. Interestingly, the two previous predictions turned out to be true with prices even higher than projected. The question though is if Bitcoin will actually hit $16,000 by the end of this month with only two days left.
Analysts say despite the 42% gain Bitcoin experienced, there is still room for another rally as instead of the RSI reaching 70 for a pullback, it is still neutral in the mid 60’s.
This means there is plenty of room for Bitcoin to push even further and because of this, they believe $16,000 may not be entirely impossible in October.
What if it Pulls back?
Although Bitcoin has the potential to rally as supported by Tome Lee’s S&P relationship, it is still possible for the asset to experience another dip if it does not manage to stay above key support.
Currently, the main support is at $8,800 according to analysts. If Bitcoin loses that, it may be going as low as $7,700 or $7,400.
If the opposite happens then Bitcoin investors and holders would be expecting another huge move in the next 48 hours if the 4chan “prophecy” and Fundstrat’s S&P correlation play out.