The S&P 500 Index and the Nasdaq Composite have been experiencing steady gains this year, but they have now been overtaken by Bitcoin, which has risen nearly 83% year-to-date. The recent influx of Bitcoin ETF applications seems to have attracted the attention of institutional investors. Bloomberg senior ETF analyst Eric Balchunas pointed out that the ProShares Bitcoin Strategy ETF (BITO) witnessed its largest weekly inflow in a year.
Bitcoin’s bullish price action has led to LookIntoBitcoin founder Philip Swift’s latest research showing that Bitcoin’s RHODL ratio metric indicates the cryptocurrency’s supply is moving from long-term holders to speculative investors, signaling increasing mainstream trading interest. Does this mean that the entry of speculators will boost prices further, or is it a sign that the markets may be overheated in the near term and could correct?
The S&P 500 Index has recently pulled back to its breakout level near 4,325, where the 20-day exponential moving average (EMA) is also situated. Should the price rebound from the 20-day EMA, it would suggest that the sentiment remains positive and traders are viewing the dips as a buying opportunity. In this case, the bulls will try to propel the price above 4,448 and resume the uptrend.
On the other hand, if the price turns down and plummets below the 20-day EMA, it could signal a deeper correction to the 50-day simple moving average (SMA) at 4,206.
The U.S. dollar index, on the other hand, has been fluctuating around its 50-day SMA (102.68) and the 20-day EMA (102.92). If the price closes above the 20-day EMA, the index could rise to the downtrend line, which the bears are expected to defend. On the downside, a break and close below the support at 102 could result in a sinking index to 100.82.
Bitcoin has been seeing consolidations near the overhead resistance of $31,000, as bulls have been building support around $30,000. If the bulls can propel the BTC/USDT pair above the $31,000 to $31,500 resistance zone, the next leg of the uptrend could be on the way with a possible rally to $40,000.
However, the cryptocurrency market remains volatile and uncertain, bringing risks for both bulls and bears. With the involvement of speculative investors, market shifts could occur in either direction. Investors are advised to conduct their own research and tread cautiously in these conditions.
Source: Cointelegraph
