Bitcoin (BTC) has crossed into bullish territory, but prices remain vulnerable to a potential sell-off in stocks, an analyst believes.
- The leading cryptocurrency jumped above $10,700 on Monday, confirming an upside break of 10-day-long price consolidation.
- While the breakout has exposed resistances at $11,00–$11,200, Matthew Dibb, co-founder and COO of Stack Funds, said it’s too early to call an end of the price pullback from August highs above $12,400.
- “Previous sell-offs have been exacerbated by risk-off momentum in stocks, particularly the tech-heavy Nasdaq index,” Dibb told CoinDesk. “We remain cautiously bullish this week.”
- Bitcoin’s decline from $12,000 to $10,000 seen in the first week of September was also accompanied by a 10% drop in U.S. tech stocks.
- Analysts at investment banking giant Goldman Sachs say the U.S. stock market sell-off is nearing an end.
- However, Joel Kruger, a strategist at LMAX Exchange, believes stocks are going to have a hard time rallying, leaving the door open for a bitcoin price pullback to the $6,000–$8,000 range.
- “Bitcoin needs to clear the 2019 high of $13,800 to force me to rethink my bearish bias,” Kruger told CoinDesk.
- Meanwhile, Stack’s Dibb is also keeping an eye on the action in the foreign exchange markets.
- “We are paying close attention to the USD trade flow and any further rotation to reserve currencies [like the U.S. dollar] that may signal macro hedging,” he said.
- The dollar index, which gauges the greenback’s value against major fiat currencies, has come under pressure this week, propelling hard assets like bitcoin and gold higher.
- Bitcoin has developed a relatively strong negative correlation with the dollar index this quarter.
- The cryptocurrency is currently trading near $10,870 at press time, according to CoinDesk’s Bitcoin Price Index.
- From a technical analysis standpoint, the immediate bias will remain bullish as long as prices hold above $10,500.
- However, $11,200, which acted as strong support in August, may now prove a tough nut to crack, according to Patrick Heusser, a senior cryptocurrency trader at Zurich-based Crypto Broker AG.