Bitcoin Triggers First Sell Signal Since Last Month While S&P 500 Moves Closer to ATH
Today, the markets have been extending the losses from yesterday.
Not just bitcoin but stocks also started by incurring losses despite better than expected retail sales and stable unemployment data, but as economist and trader Alex Kruger said, “the market has stopped reacting to it in the past few weeks.”
What has been affecting the markets has the bad performance of Chinese shares that dropped by the most in over five months.
China stocks crashed despite its Q2 GDP growth swinging up 3.2% y-o-y beating the market consensus of 2.4%. However, retail sales fell short of forecast by dropping 1.8% in June which means Chinese domestic customers are still reluctant to “go out and consume.”
Also, US Secretary of State Mike Pompeo said Wednesday the country will impose via restriction on Chinese tech firms.
The less than expected consumer data from Beijing and the continued rise in tension between Washington and Beijing amidst the fresh concerns about rising coronavirus infections and the faltering recovery of the global economy has shaken the investors and as such weighing on risky assets.
Also, investors are fretting about the possibility of another stock market crash with Larry Williams reckoning the currency rally in the markets will only last this month.
The S&P 500 is already close to its all-time high of 3,386 achieved in February before the March crash which marked the end of “the longest bull run in recorded history,” currently it is at 3,215.
But the speech by Christine Lagarde, president of the European Central Bank helped uplift the market. The ECB is urging European lawmakers to close a deal on their stimulus package while continuing to provide ample money printing.
According to the GTI Vera Convergence Divergence Indicator, which measures up and downshifts, a new sell signal has been triggered. This is the first time since June when BTC failed to break $10,000 that this signal has occurred.
“A break below $9,000 would raise a yellow warning flag on Bitcoin,” said Matt Maley, chief market strategist for Miller Tabak + Co. If BTC falls below the mid-May low of $8,636, it would signify a red flag, he said.
It has been 24 days in a row that bitcoin hasn’t had a 5% daily move, the longest streak since the last one that lasted 27 days ending on April 1st, 2019. The last time the streak was broken, bitcoin’s one month return was over 31%.
Interestingly, the longest streak before that was 29 days long which ended on November 13, 2018, resulting in the subsequent monthly return of -48%.
#bitcoin implied volatility is having a muted reaction to the Twitter hack yesterday
There doesn't seem to be a major concern about this unexpected event triggering a move in the bitcoin price. pic.twitter.com/gBDE4ytHk0
— skew (@skewdotcom) July 16, 2020
The market is currently signaling a downward move with “bearish e2e entry” confirmed yesterday and rekt GBTC premium which is typically bearish.
“BTC Bulls need to reclaim $9400 quick sharp. Coming to the end of consolidation /compression now. Doing so below the middle of the bbands is not typically a good sign,” said trader Flib Flib.
In the short-term, a downwards move is expected, but in the long-term, the market remains bullish with PlanB’s S2F model-based “$288K forecast unchanged.”