The contagion effect between American stocks and bitcoin (BTC) risks making further waves. The performance of the S&P 500 recently dipping below its 50-day moving average is already causing growing nervousness among investors, which could spill over into the crypto market. How will this development affect bitcoin?
S&P 500 movements and their impact on bitcoin
The S&P 500 recently closed below its 50-day moving average, an event not seen in five months. At the same time, American stock indices are performing mixed. A situation which is generally considered a warning for the cryptocurrency market, particularly for bitcoin.
Indeed, when major stock indices fall, investors are cautious with their assets. The feeling of uncertainty in the financial markets impacts other digital assets, including bitcoin. Referring to the movements of the S&P 500, bitcoin holders can anticipate a period of increased volatility. The contagion effect may push some investors to sell their digital assets to reduce their risk exposure.
What should bitcoiners expect?
Bitcoin is in a critical zone. The flagship crypto is currently valued at $61,950 with a decline of 3.78% over the last 24 hours. This negative performance mirrors that of the last seven days, a period during which the queen of cryptos lost 10.20% of its value.
If bitcoin manages to stay above $60,000, the next important threshold would be around $67,000. Historically, this level has posed challenges for the flagship crypto. Exceeding this threshold could mean renewed confidence and a possible upward trend for bitcoin.
In case of a drop below $60,000, the next support for the queen of cryptos is around $50,000. The value of bitcoin could therefore quickly plummet in this scenario.
To conclude, if the S&P 500 continues to fall, bitcoin could come under additional pressure and see its price fall. Conversely, a rally in the stock markets could help the flagship crypto recover and potentially surpass its previous highs.
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