The multi-month correlation between the crypto market and the S&P 500 is quickly slipping away. Over the past week, the S&P 500 fell about 1.6%, while the gold price fell less than 1%, while the crypto market fell more than 12% during the same period.
The broader crypto market posted significant losses over the past 24 hours, led by Bitcoin, which traded below $100,000 on Tuesday.
Source: Santiment
What’s next for Crypto amid significant divergence from the S&P 500
According to Santiment, the crypto market is well positioned to recover after reaching oversold levels. A potential recovery for the S&P 500 is likely to impact the broader crypto market with a relief rally as traders bet on a medium-term recovery.
Furthermore, the crypto market has built significant positive fundamentals in the recent past, including clear regulations in major jurisdictions amid high demand from institutional investors. Furthermore, the Fed’s upcoming quantitative easing (QE) will build on rising global liquidity, which is positive for crypto.
“This sharp underperformance suggests that crypto markets may be oversold. Extreme volatility in crypto often leads to a ‘rubber-band’ effect, where the capitulation of traders can lead to a massive rebound once selling pressure subsides,” Santiment said.
BTC price trends at ‘bear market’ levels; Here are the key levels
From a technical analysis perspective, the BTC/USD pair must recover from its weekly 50 Simple Moving Average (SMA) to invalidate further capitulation.
Source: X
According to market analyst Aksel Kibar, BTC price cannot fall below $98,000 in the weekly time frame as this will negate the bullish sentiment in the medium term.
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