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Bitcoin Price Stabilizes after Halving, what’s next?

Since the block reward halving on Monday, the Bitcoin market has entered somewhat of a lull, with the asset trading in the high-$8,000s with little volatility ever since the event.

This price action — or lack thereof — has brought the cryptocurrency into “no man’s land,” according to one popular crypto trader pointing to the chart below.

Bitcoin Price Stabilizes as Investors Watch Fundamental Health

The Bitcoin did attempt to push above $9,000 earlier today, but this was met with slight selling pressure that ultimately led it lower.

From a fundamental standpoint, investors have been anxiously awaiting to see how the mining rewards halving could impact the cryptocurrency from a fundamental perspective.

Although there hasn’t been any massive decline in Bitcoin’s hash rate yet, it is expected that the reduced block rewards will lead smaller miners to capitulate, potentially triggering a sharp decline.

Source: Glassnode

Multiple on-chain metrics are suggesting that the cryptocurrency is strong, as data from blockchain analytics firm Glassnode shows that Bitcoin’s network health and liquidity both increased this week.

They explain that the cryptocurrency’s network growth has now reached its highest value seen since 2017.

“Network Health improved through solid gains in both Network Growth and Network Activity, the former reaching the highest possible value for the first time since 2017.”

They also explain that the cryptocurrency’s liquidity has been increasing by a marginal amount on a week-to-week basis throughout the past five weeks.

This is a positive sign that points to heightened investor activity.

“Liquidity has seen marginal improvement over the last few weeks after registering increases in Transaction Liquidity and slight decreases in Trading Liquidity. After staying close to the 50 point mark for 5 weeks, it has now worked its way up by 9 points.”

Stocks could change Bitcoin’s trajectory

While the technical outlook may be more bullish than it is bearish, a crash in the stock market could rapidly change that.

Like Bitcoin, the S&P 500 index and global equities have been on a strong recovery since the March lows, rallying more than 30%. But analysts are starting to fear a stark reversal after American indices fell by 2% on Tuesday.

Another analyst recently shared the chart below showing that one of his indicators is about to roll over into bearish territory for the S&P 500.

Chart from Cold Blooded Shiller (@ColdBloodShill on Twitter), a popular cryptocurrency trader.

The last time the indicator rolled over was at the 3,300 top for the S&P 500, which was followed by the 35% drop to 3,150. This means that if historical precedent is upheld, the stock market could soon see a strong move lower as the market trend turns negative.

Fundamentally, things are not much better for equities.

Compound Capital Advisors’ Charlie Bilello shows that the S&P 500 is on pace for its lowest “quarterly GAAP earnings since Q1 of 2009,” which may coincide with a drop back towards the lows.

Bitcoin could drop if stocks roll over as the Federal Reserve of Kansas City noted that during periods of economic “stress,” Bitcoin has a positive correlation with the S&P 500 index to a level “significant at the 5% level.”

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