Bitcoin, Nasdaq, & S&P 500 Death Cross Looms
Bitcoin (BTC) continues to face selling pressure, falling another 2% today to around $81,500. A concerning parallel is forming with US equity indices like the Nasdaq and S&P 500, which are exhibiting a potential 'death cross' pattern, indicating a possible bearish trend in the coming weeks.
Bitcoin and Market Outlook
Bitcoin's performance has shown a strong correlation with the S&P 500 and Nasdaq in recent years. The recent market turmoil saw the S&P 500 lose $2 trillion in investor wealth over three trading days (Wednesday to Friday), with futures plunging a further $120 billion after market close on Friday, according to The Kobeissi Letter. This sell-off follows a brief rally in mid-March that was reversed by new tariffs.
Similarly, Bitcoin's attempt to rally past $90,000 was swiftly rejected near $89,000. Further threats of tariffs, particularly those targeting Russia, increase the risk of Bitcoin falling below $80,000.
Barchart data indicates that BTC, along with the S&P 500 and Nasdaq, is forming a death cross pattern. While price declines ahead of death crosses sometimes mark market bottoms, the situation warrants caution. We can expect significant volatility in the coming days.
Noted economist Peter Schiff commented on the situation, contrasting the record high for gold (above $3,090) with the sell-off in risk assets like Bitcoin and stocks, questioning Bitcoin's status as 'digital gold'.
Global M2 Money Supply and Miner Activity
The correlation between Bitcoin's price and the global M2 money supply has been widely discussed. However, crypto analyst Ali Martinez cautions investors, noting that the global money supply has dropped by approximately $1 trillion in the past two weeks. This casts doubt on the expectation of a liquidity-driven Bitcoin rally.
Furthermore, Martinez reports a significant sell-off of over 2,400 BTC (approximately $220 million) by Bitcoin miners last week, adding to the bearish sentiment.
Inflationary Pressures and US PCE Data
Last week's core US Personal Consumption Expenditures (PCE) data revealed persistent inflationary pressure. This strengthens concerns that monetary tightening could last longer than anticipated, further impacting Bitcoin's price.
At the time of writing, Bitcoin is trading at $81,664, down 1.8%, with daily trading volumes around $17.2 billion. Bitcoin futures open interest has decreased by 2.7% (below $53 billion), while 24-hour liquidations have surged to $64 million, with $54 million in long liquidations (Coinglass data).
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