We managed to break the $20K barrier on Bitcoin again, but is it too soon to celebrate?
) tend to trade in tandem with equities, and BTC’s Oct. 4 rally to $20,365 comes as the Dow, S&P 500 and Nasdaq closed the day with 2% to 3% gains.As a reminder that short-term price action is not necessarily reflective of a larger trend change, Coin Metrics“Correlations among BTC, ETH and with the S&P 500 have increased recently as the benchmark index fell in price to 3600, which had not been breached since December of 2020.
Despite the Oct. 4 “all-in rally” in stocks and crypto markets, larger fears of global runaway inflation, rising interest rates and other economic concerns continue to suppress investors’ appetite for interacting with markets, a fact that is clearly reflected in Q3 results.On Oct. 5, OPEC announced plans to cut oil production by 2 million barrels per day, which is roughly equivalent to 2% of the global oil demand.
Generally, institutional investors like Citi and Goldman Sachs expect volatility in equities markets to continue, and both have revised down their end-of-year targets for the S&P 500, while investors are still predicting a down year in 2023. All said, inflation remains high across the globe, corporate earnings expectations are being adjusted to the downside, and the Fed appears confidently resolute in its current plans for reducing inflation.
None of these developments are conducive to boosting investors’ risk sentiment, and given Bitcoin’s correlation with equities markets and sensitivity to bearish economic news flow, it seems unlikely that BTC breaking through the descending trendline is a sign of a trend change.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com.
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