Bitcoin Price Looks North as Stock Market Falls Again

BTC looks set to make further gains amid mixed action in the crypto markets.

Having hit a four-day high of $8,621.27 yesterday, CoinDesk's Bitcoin Price Index (BPI) fell to $7,754.67 at 05:29 UTC today. As of writing, prices had bounced back to $8,284. The cryptocurrency has depreciated by 0.4 percent in the last 24 hours, according to data source CoinMarketCap.

Meanwhile, bitcoin BTC$90,271.95 offshoot bitcoin cash has strengthened by 25 percent in the last 24 hours, while Ripple's XRP token is reporting a 3 percent rise. The losing side includes names like Ethereum's ether token, Cardano, Stellar and NEO, which are all showing slight dips.

Bitcoin's retreat from $8621.27 to $7,754 coincided with a 1000 point drop in the Dow Jones Industrial Average (DJIA), reportedly due to a rise in U.S. bond yields and fears of higher inflation.

Reports

are doing the rounds that the 90-day correlation between the daily percent returns of the cryptocurrency and the S&P 500 has jumped to 33 percent – the highest since January 2016.

Though this is up for debate, BTC's lackluster price action during the recent bout of equity market sell-off may discredit the theory often put forward that the cryptocurrency is a new safe haven asset like gold, the Swiss franc and treasuries.

So, for the time being, bitcoin and cryptocurrencies in general are unlikely to receive a shot in the arm due to instability in other markets.

Yet, bitcoin often confounds expectations, and the technical chart indicates scope for a rise to $9,000 over the weekend.

1-hour chart

The above chart (prices as per Coinbase) shows:

• BTC has breached the rising trendline
• Bull flag pattern – a bullish continuation pattern – meaning an upside break signal continuation of the rally from Feb. 6 low of $5,873.

4-hour chart

The previous two candles had big tails (big gap between lows and close), indicating strong dip demand, and have also established $7,750 as strong support. The candles also indicate that the descending trendline (1) is now acting as a strong support.

Meanwhile, on the higher side, BTC may face strong resistance above $8,625 considering the fact that bulls have faced rejection $8,650 and $8,625 in the last 24 hours.

View

Back-to-back 4-hour candles with long tails at key trendline support indicate BTC could witness an upside break of the bull flag pattern.

The bullish breakout would be confirmed after 1-hour candle closes above the flag resistance. In such a scenario, prices could reach $9,000–$9,185 (target as as per the measured height method, i.e. pole height added to breakout price).

On the downside, a break below $7,535 (Feb. 7 low) would signal breach of higher lows pattern and open the door for a drop to $7,000 levels.

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Coinbase and Ripple.

Stock prices image via Shutterstock