Bitcoin Breaks Below $10K Again — Next Stop $8K? (BTC)
On that day Bitcoin touched $9,100 and then bounced back to $12,000. It has since been range bound between $10,000 and $12,000… until today. Yesterday, Bitcoin broke below the $10,000 support.
Why is this important? In addition to a strong inverse correlation to gold that I discussed in the earlier blog, Bitcoin appears to have a reasonable correlation to stocks also. In the chart below, I compared Bitcoin to the Dow Jones Industrial Average, the DJA lagged by 45 days. Bitcoin had its melt-up in December and stocks have, until today, had their melt-up in January. Is the speculative peak in Bitcoin something stock investors should take notice of?
The $20,000 blow-off top reached on December 17 has now given way to a 50% peak-to-present decline. Does this relationship prove durable and telegraph a 10% decline in stocks? If so, the recent melt-up in stocks may be at risk.
Bitcoin (BTC) rose $0.89 (+0.32%) in premarket trading Wednesday. Year-to-date, BTC has gained 5.58%, versus a % rise in the benchmark S&P 500 index during the same period.
source-ETF DAILY NEWS