Bitcoin Price Continues To Drop With Seven Daily Red Candles

The listed below is an excerpt from a current edition of Bitcoin Magazine Pro, Bitcoin Magazines premium markets newsletter. To be amongst the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.Bitcoin And The S&P 500In our latest regular monthly report, which focused thoroughly on the progressing macroeconomic environment, we highlighted the strong correlation in between bitcoin and equities over the course of 2020, while also describing bitcoin as a quasi-24/ 7/365, inverse VIX (currently). Typically, this means that when equities are bidding, bitcoin has actually gotten a lift as well; and when equities are selling off (likely alongside an increase in the VIX), bitcoin would face downside pressure. Market individuals should remember that following the implosion of LUNA/UST, bitcoin was combining around the $30,000 for nearly a month before equity market volatility increased as stocks took a brand-new leg lower, which pulled bitcoin down without crucial support.Generally, when equities are bidding, bitcoin has gotten a lift as wellSo what stands apart in the present pattern? Well, both markets have exogenous variables that can impact cost and historical realized correlations. As equities continue to bid, as a result of passive circulations and a capture of late bearish positioning, bitcoins rate action has actually started to meaningfully turn over, with its derivative market brief capture mostly taking place currently. Bitcoin especially remains in the midst of its seventh red day-to-day candle in a row (lower closing rate than opening). Bitcoin had seven straight daily red candles while the S&P 500 had a small uptrendGiven that equities have actually been in a more comprehensive uptrend, the underperformance over the brief term is worrying for bulls, as one should ask themselves where bitcoin will trade if/when equity markets turn lower and/or tradition market volatility considerably increases.While this problem is focused less on long-term basics and more on short-term rate action, this lines up with our wider market thesis that risk properties have not bottomed, as covered in our July Monthly Report. Macro rules all at the current minute, and given bitcoins still nascent place as a simple pond amid a worldwide ocean of total assets, recognized connections and relative underperformance are expected and notable, respectively..

Other Questions People Ask

What does it mean that Bitcoin price continues to drop with seven daily red candles?

The phrase "seven daily red candles" indicates that Bitcoin has closed lower each day for a week, reflecting a bearish trend. This pattern suggests a significant selling pressure in the market, which can be concerning for traders and investors. The current drop is particularly notable as it occurs despite a broader uptrend in equities, raising questions about Bitcoin's resilience and correlation with traditional markets.

How does the correlation between Bitcoin and the S&P 500 affect the current drop in Bitcoin price?

The correlation between Bitcoin and the S&P 500 means that when equities are performing well, Bitcoin often sees upward momentum as well. However, the recent drop in Bitcoin price, even while the S&P 500 experiences a slight uptrend, indicates a divergence that could signal underlying weakness in Bitcoin's market. This situation raises concerns about what might happen to Bitcoin if equity markets begin to decline significantly.

What factors could influence the future of Bitcoin price after seven daily red candles?

Several factors could impact Bitcoin's future price following this streak of seven daily red candles. Key among these are macroeconomic conditions, including inflation rates and market volatility, which can affect investor sentiment. Additionally, if equity markets reverse their current trend, Bitcoin may face further downside pressure, making it crucial for traders to monitor both markets closely.

What should investors consider when Bitcoin price continues to drop with seven daily red candles?

Investors should consider the implications of the current bearish trend and its potential impact on their portfolios. With Bitcoin's price declining while equities are stable or rising, it may indicate a lack of confidence in Bitcoin as a risk asset. It's essential for investors to assess their risk tolerance and stay informed about macroeconomic developments that could further influence Bitcoin's price trajectory.

Is the current drop in Bitcoin price a sign of a larger market trend?

The ongoing drop in Bitcoin price, marked by seven consecutive red candles, could indeed signal a larger market trend. This behavior suggests that risk assets may not have reached their bottom yet, as indicated by the broader market analysis. Investors should remain vigilant and consider how external factors, such as changes in equity markets or economic indicators, could further affect Bitcoin's performance moving forward.