Analyst ‘Cautiously Bullish’ on Bitcoin but Says Equity Sell-Off Still a Threat

Sep 15, 2020 at 11:24 UTCUpdated Sep 15, 2020 at 13:57 UTC

Bitcoin (BTC) has crossed into bullish territory, but prices remain vulnerable to a potential sell-off in stocks, an analyst believes.

The leading cryptocurrency jumped above $10,700 on Monday, confirming an upside break of 10-day-long price consolidation.
While the breakout has exposed resistances at $11,00–$11,200, Matthew Dibb, co-founder and COO of Stack Funds, said it’s too early to call an end of the price pullback from August highs above $12,400.
“Previous sell-offs have been exacerbated by risk-off momentum in stocks, particularly the tech-heavy Nasdaq index,” Dibb told CoinDesk. “We remain cautiously bullish this week.”
Bitcoin’s decline from $12,000 to $10,000 seen in the first week of September was also accompanied by a 10% drop in U.S. tech stocks.

Bitcoin and Nasdaq chartsSource: TradingView

Analysts at investment banking giant Goldman Sachs say the U.S. stock market sell-off is nearing an end.
However, Joel Kruger, a strategist at LMAX Exchange, believes stocks are going to have a hard time rallying, leaving the door open for a bitcoin price pullback to the $6,000–$8,000 range.
“Bitcoin needs to clear the 2019 high of $13,800 to force me to rethink my bearish bias,” Kruger told CoinDesk.
Meanwhile, Stack’s Dibb is also keeping an eye on the action in the foreign exchange markets.
“We are paying close attention to the USD trade flow and any further rotation to reserve currencies [like the U.S. dollar] that may signal macro hedging,” he said.
The dollar index, which gauges the greenback’s value against major fiat currencies, has come under pressure this week, propelling hard assets like bitcoin and gold higher.
Bitcoin has developed a relatively strong negative correlation with the dollar index this quarter.
The cryptocurrency is currently trading near $10,870 at press time, according to CoinDesk’s Bitcoin Price Index.
From a technical analysis standpoint, the immediate bias will remain bullish as long as prices hold above $10,500.
However, $11,200, which acted as strong support in August, may now prove a tough nut to crack, according to Patrick Heusser, a senior cryptocurrency trader at Zurich-based Crypto Broker AG.

Also read: Market Wrap: Bitcoin Passes $10.7K; Ethereum Gas Usage Hits Record September Highs

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