The US stock market is falling as the Dow Jones Industrial Average (DJIA) fell 358 points in trading before selling. Bitcoin (BTC) has fallen to $ 10,374 on major exchanges, but a further decline is unlikely.
There are three main reasons that may increase Bitcoin sentiment in the near future. Potential catalysts are the likelihood of a stimulus package, BTC’s strong technical setbacks and a flexible support level of $ 10,5000.
As a result, the probability of the stimulus package increases.
Over the past month, the Dow Jones has struggled to recover from renewed COVID-19 cases.
Several macro-political factors, including the US-China relationship and economic stimulus, have put significant pressure on the Dow.
Dow fell 4.4% after peaking on September 2, according to Google Finance. Heavy technology indices such as the S&P 500 and Nasdaq Composite had large losses of 5.6%.
US President Donald Trump’s unexpectedly positive COVID-19 test result has caused even more concern in the markets. Bitcoin has plunged into the Dow Jones for the past 12 hours after President Trump tweeted:
While the news originally triggered a dip in markets, it could lead Republicans to reconsider the stimulus proposal.
On October 1, Democratic lawmakers formally approved a $ 2.2 trillion stimulus bill, including direct stimulus tests. The Trump administration and Republicans rejected it, saying there were many unnecessary elements in the agreement.
But as presidential elections approach and markets fall, this could force the Trump administration to work on stimulus. Once the incentive is approved, it is likely to trigger Bitcoin and Dow gains, which could increase Bitcoin’s momentum.
Bitcoin sees strong technical stability
Bitcoin fell to around $ 10,380 on Coinbase as the Dow Jones fell more than 300 points during the pre-sale session.
Since then, Bitcoin has experienced a relatively strong recovery. BTC fell below $ 10,400 on the lower timeframe charts, but quickly accumulated above that level. BTC is currently consolidating below $ 10,500, which is a major level of support since the beginning of August.
A trader under the pseudonym “Benjamin Plants” said that Bitcoin is more related to stocks than to gold. Given the strong connection, if stocks recover after the initial market reaction, it may partially ease the pressure from Bitcoin. The merchant said:
“I think, once and for all, we can all agree that #btc is not gold or stocks, does not shrink or change as often as our prejudices are, so it’s happening now.” …
The critical support level is $ 10,500.
Over the past two months, as Bitcoin has consolidated below a critical support level, it has historically exploded.
$ 10,500 is an important level that can determine whether Bitcoin moves towards the $ 11,100 to $ 11,300 resistance range or a $ 9,600 gap in the near future.
Traders also speculate that the allegations against BitMEX may prove to be irrelevant in the long run. Canting Clarke, a cryptocurrency trader, wrote:
“When it comes to order flow, although open interest fell in Mex versus $ BTC, I do not see much difference between LTF and Mex. This is still quite in line with the reference results. Wouldn’t that be an event? ”
The convergence of analysts, who expect the BitMEX event to have a smaller impact on Bitcoin in the near future and the recovery of BTC to the $ 10,500 support zone, support the optimistic outlook for BTC in the medium term.