Bitcoin’s downtrend continues as traditional markets mount comeback
Since 20 May, Bitcoin (BTC) has been sliding steadily while the S&P 500 and NASDAQ have registered gains of nearly 10%.
- Bitcoin's financial showing over the last 6 months has been its worst since 2014–2015.
- The asset is currently down 56% from it's all-time-high value of AUD$97k (US$69k).
- Technical data suggests that BTC may face another major capitulation event in the near term.
For over 2 weeks running, Bitcoin has continued to stay range-bound between AUD$40,000 and $43,000. Over the past 12 months, BTC has incurred losses worth approximately -12%, with the asset currently trading at AUD$42,250.
Bitcoin has been in a downtrend for 9 weeks running now, the most in its history. While traditional markets including stocks and commodities were able to register minor gains over the weekend, Bitcoin and the crypto market at large face a lot of volatility. On the subject, researchers for trading firm QCP Capital highlighted:
"Most concerning has been the divergence between equities and crypto. S&P and NASDAQ have traded about 10% higher since the 20 May lows while both BTC and ETH have traded lower in the same period. This is not the direction of decoupling we were hoping for."
Analysts also noted that the last time the S&P 500 rallied to hit new highs while Bitcoin was dipping, the crypto market faced a series of liquidations. The coming few days could see BTC face more sell pressure.
The future does not look good for Bitcoin
The month of May has seen the BTC/USD pair lose approximately 22% of its value, making this 30-day stretch the second worst in Bitcoin's decade-long history. Analysis of BTC's downtrends over time suggests that the asset's drop from its all-time high currently stands at 200+ days, its fourth-longest such stretch. The last time such a long down turn was witnessed was back in 2014, with the lull lasting for approximately a full year.
BTC's technical and historical data suggest that its ongoing sideways price action could continue into the near term followed by another major capitulation event. At press time, the asset's market capitalisation stands at US$577 bilion while its share of the digital asset sector lies at 44%.
Decoupling trend arises again
Bitcoin is showcasing signs of decoupling from traditional markets, albeit unfavorably. While the crypto was down 3% over the weekend, the tech-oriented stock market index Nasdaq Composite rose by approximately 4%. Data released by the US government shows that the national "personal savings rate" has fallen to a new 14-year low of 4.4% recently, further worsening investor sentiment surrounding both the traditional and crypto markets.
Disclosure: The author owns a range of cryptocurrencies at the time of writing.