The stock market has seen some slight weakness today, despite opening to a strong start. After trading in the green for a few hours, the S&P 500, Nasdaq, and other benchmark indices all turned red. This has created a sense of fear among Bitcoin investors.
Although Bitcoin has undoubtedly broken its correlation to the stock market throughout the past few months, it has started returning in recent times due to increased macro uncertainty.
The federal government’s inability to make any conclusive decisions about another round of stimulus has made investors fearful that the economy may soon begin a spiraling descent as unemployment rates remain incredibly high.
Because Bitcoin investors are considering the macro outlook of the economy while trading, any signs of intense weakness in equities can hinder BTC’s growth.
Today’s slight downturn has led some analysts to expect further weakness in the near-term.
The stock market flashes signs of continued weakness
Bitcoin’s price action has been quiet as of late, with bulls and bears largely reaching an impasse as its price ranges between $9,900 and $10,500.
This lack of momentum comes shortly after it witnessed the strong descent that led it from highs of $12,400.
Many have noted that this weakness came about in tandem with that seen by the benchmark stock indices, which were all previously showing intense signs of strength before they were rocked by fears of continued economic decline.
Until congress agrees on another stimulus package, there’s a high probability that the markets will continue seeing some turbulence.
Tech stocks have been hit particularly hard by this recent trend shift, as many have cut deep into their recent gains.
Bitcoin will likely continue tracking the overall state of the global markets in the mid-term.
Trader: BTC likely to see continued selling pressure as SPX grows “heavy”
While speaking about Bitcoin’s ties to the traditional market, one pseudonymous analyst observed that the S&P 500’s slight decline today may place some pressure on Bitcoin.
“SPX heavy, last few times BTC eventually followed when it went vertical down. I’m refraining from green buttoning, don’t wanna fight those forces.”
If Bitcoin breaks below $10,000 due to any prolonged weakness amongst the benchmark indices, it may bolster the narrative regarding it being a risk-on asset during times of economic turbulence.
Although there may be some truth to this, its strong performance since March has shown that Bitcoin can perform well during times of uncertainty. It has also formed close ties to the price action of gold and other precious metals.