Is the decorrelation of crypto from traditional assets underway?


Key talking points:

  • Cryptos Maintain Bullish Momentum Despite Weaker Market Sentiment
  • BTC / USD faces key test between $ 50,000 and $ 55,000

After a consistently strong performance last week, Bitcoin managed to move above the $ 50,000 mark for the first time in a month. I have to say that looking at the daily chart the upside looks healthier this time around as momentum gradually built up from the $ 40,000 area without facing a rejection before breaking through $ 50,000, as he has done several times before.

Cryptocurrencies have received a boost from major US institutions confirming that they will not ban the use of cryptos after China continually clamped down on the digital currency space. The first was the Federal Reserve last week, with President Jerome Powell saying he had no plans to ban the use of cryptos despite pressure to develop a digital dollar. And the Securities and Exchange Commission (SEC) followed suit yesterday as its chairman Gary Gensler told Congress he also had no plans to ban crypto, stressing that it would be up to Congress to decide.

This acceptance of cryptos makes them more common, which has led to a more correlated relationship with traditional assets, as evidenced in recent weeks Bitcoin has been tracking lower stocks amid concerns about the economy and the collapse of Evergrande. . But we may be at the start of a decorrelation, as Bitcoin and most altcoins have seen gains over the past week despite weaker sentiment in the overall market. It might be soon to tell, but with the global economies facing growing debt and growing challenges, we might start to see the outperformance of cryptocurrencies that we missed the rest of the year.

Looking at the BTC / USD chart, the short term trend is positive with higher lows reinforcing the upward push. That said, as I mentioned before, the spread between $ 50,000 and $ 55,000 is a challenge, an area that halted and reversed the bullish momentum in early September, so the next few sessions are going to be crucial for the market. continuation of the uptrend. We’ve already seen some hesitation as resistance moves up to $ 51,890, so now it’s a matter of making sure it’s just a pullback for new buyers to come in and take some momentum rather than the start of a correction below $ 50,000.

BTC / USD daily chart

During this time, Ether is among the worst performers today, dropping more than 4% at the start of the European session. ETH / USD now sits on a key horizontal line at $ 3,379, which is the upper bound of a confluence area that has attracted buyers and sellers in recent months. The long-term outlook is strongly bullish for Ether as technological advancements and its intrinsic potential increase its valuation, but ETH / USD is expected to face increased resistance towards the $ 4,000 mark in the next quarter. For now, $ 3,218 should offer some support, followed by the $ 3,000 mark, while $ 3,570 is the area to watch for a breakout to the upside.

ETH / USD Daily graphic

Is the decorrelation of crypto from traditional assets underway?  - BTC, ETH Latest

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— Written by Daniela Sabin Hathorn, Market Analyst

Follow Daniela on Twitter @HathornSabin

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