Driven by US and Chinese trading optimism, stock prices rose worldwide yesterday Thursday. Elsewhere, the historic victory of British Prime Minister Boris Johnson caused UK and European stocks to rise.
The markets have now become volatile – but what about Bitcoin? An analysis of the medium-term scenarios.
Stock rally could boost investor appetite for cryptocurrencies
Usually Bitcoin shows no correlation to traditional investments, including stocks. However, in the past few months, several ups and downs of the “S&P 500 Index”, which tracks 500 of the largest US companies, have coincided with the Bitcoin trends – albeit to different degrees.
Yesterday the “S&P 500” index reached a new record high with NASDAQ after the US announced interim agreements with China. The Dow Jones is floating near its ATH set last month.
Based on the most recent correlations, this could also be an optimistic signal for Bitcoin. Trump tweeted yesterday that the world’s two largest economies were on the verge of reaching consensus.
The US president approved a limited agreement that would remove existing tariffs on imported goods from China. The United States will also waive the new tariffs that are due to come into force next Sunday. In return, China has to buy US agricultural products, among other things.
Trump met with his trading advisors yesterday and discussed possible outcomes. Elsewhere, the great victory of the Conservative Party has spurred European stocks.
This upward movement could benefit Bitcoin in the medium term. BTC has increased over 0.8% in the last 24 hours, according to Coinmarketcap data. Still, it still can’t break the resistance line of a downtrend that started in late October.
Is bitcoin left behind?
However, in a bearish Bitcoin scenario, investors could be attracted to traditional investments – at the expense of cryptocurrencies. Investors don’t want to miss the rally and could invest in stocks.
In addition, currency currencies such as the British pound have become very volatile in contrast to BTC, which is a strong argument for short-term trading. All in all, Bitcoin is now at a crossroads, and the next step could determine the longer-term trend.