Why the S&P 500 Could Help Push Bitcoin Higher

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While the world of finance can’t look past the recent year-to-date returns of Bitcoin and other cryptocurrencies, it’s the S&P 500 that has everyone glued to their seats.

The S&P 500 is on the most watched trend line in global markets and the outcome could ultimately give BTC a major boost. Here’s why.

How the S&P 500 Could Give BitcoinA a Boost

For nearly 100 years, the S&P 500 has been the most important stock market index, tracking the performance of 500 of America’s largest companies. It is the benchmark used to compare the performance of individual stocks.

Since the start of the pandemic, Bitcoin and the S&P 500 have become highly correlated, but that correlation has since dissipated. BTC has instead become more correlated to gold.

However, a major S&P 500 breakout could be on the horizon, which could give the cryptocurrency market an additional boost. And a big plus.

Extreme bearish sentiment in financials would suggest the stock market is on the cusp of the worst crash and bear market since 1929. But an upside breakout of an important trendline could instead lead to a surprising upside move against -fluent.

The S&P 500 could break out of a one-year trend | SPX on TradingView.com Risk Appetite May Return with Trendline Breakout

A breakout of the S&P 500 has little to do with Bitcoin itself, and any rise would be more due to the message it sends. This could convincingly end the bear market and cause a sudden change in trend.

The options data hints at some of the most significant bearish positioning in history, creating an environment ripe for a short squeeze from the record books.

A stock market reversal is also a reversal signal for risky assets in general, which is why Bitcoin and other cryptocurrencies could benefit indirectly from a sharp break in the S&P 500.

The S&P 500 is up 1% on the day, trading at around 4050. Holding above the trend line drawn above is crucial for the stock market to continue higher. A rise would also result in a golden cross in the S&P 500.

BTC is still far from a golden cross | CME-BTC! on TradingView.com A Golden Cross in the Stock Market and Crypto on the Horizon

Bitcoin is at $23,000, but is still far from a similar golden cross. The 50 and 200 day moving averages have started to wrap upwards which could be an early indication of an impending crossover.

A golden cross occurs when a short-term moving average crosses above a long-term moving average and generates a buy signal in the asset. The death cross is the opposite sell signal, which occurs when a short-term moving average crosses below the long-term moving average.

Although BTCUSD has not hit the daily timeframes yet, several altcoins such as Litecoin, Polygon, Fetch.AI and many others have already done so.

Elsewhere in financials, gold and silver crossed into gold, while the DXY Dollar Currency Index suffered a deadly crossover in early 2023.

Follow @TonyTheBullBTC on Twitter or join the TonyTradesBTC Telegram for exclusive daily market insights and technical analysis training. Please note: The content is educational and should not be considered investment advice. Featured image from iStockPhoto, Charts from TradingView.com

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