The past two months have been a difficult period for bitcoin investors, as the cryptocurrency dropped from around $45,800 to $28,800, which is a 40 percent drop.
“There is no doubt that the strong relationship between cryptocurrencies and other risk assets has recently collapsed. While tech stocks are rallying in the US after weeks of declines, digital assets have largely remained on the sidelines,” says analyst Fiona Cincotta at City Index according to Bloomberg.
The US hi-tech Nasdaq exchange celebrated its third consecutive day with a rally on Friday, while bitcoin is down more than 2 percent in the past three days.
Bloomberg notes that recent developments may represent a break in the relationship between stocks and bitcoin, and points to this as a sign of a lack of conviction, which in turn is described as a worrying trend.
“I don’t think this marks the end of the positive correlation between Bitcoin and the Nasdaq, but there is a concern that Bitcoin will only follow the Nasdaq when it falls,” says Cincotta.
She doesn’t think it’s unlikely that Bitcoin will drop below $28,000, but she says it would be a great event that could test the year-end bottom of $25,425.
If bitcoin drops, $20,000 will be the next psychological level to play, she continues.
On the other hand, you think that if the price goes above $31,500, it could be a sign that the price is on the cusp of a crash.
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