If earlier Bitcoin was called digital gold, and its price correlated with the price of gold, now the situation is changing. The correlation between Bitcoin and gold is declining. Now it is at its 2018 low. Since the beginning of the year, the BTC price has decreased by about 18%, while the price of gold has risen by 4%.
Now Bitcoin is actively correlating with stock indices, particularly the S&P 500. However, this correlation is increasingly hurting Bitcoin. Investors increasingly consider cryptocurrency as a risky asset. The high correlation between BTC and tech stocks will continue until the end of this year if the Fed raises rates again. It will further reduce the potential of cryptocurrency as a tool for hedging inflationary risks.
Yesterday, the BTC/USD pair again failed to overcome the 39,000 mark. Thus, it again confirmed the weakness of the bulls. If yesterday we were talking about the possibility of the BTC price returning to the 40,000 area, today we are talking about the ability of the BTC price to stay above 38,000. A price movement below 38,000 will activate buyers, which will cause a return above this level.
On the hourly chart, the BTC/USD pair forms a triangle. It provides support in the 38,300 area. If the pair holds above this level, it will rise to the 38,600 area and face resistance. A breakdown of this resistance will allow the BTC/USD pair to rise above 39,000. Next, we will see a new attempt to return to the 40,000 area.
If the BTC/USD pair falls below the triangle, we expect prices to fall given the high open interest.
The 37,000 mark will be a critical area to keep an eye on for the next couple of days as it could strongly effect on the market trend in the short term.