While the financial world hasn’t seen the return of Bitcoin and other cryptocurrencies in recent years, it’s the S&P 500 that has everyone on the edge of their seats.
The S&P 500 is in the most watched trend line in global markets and the result could give BTC a major boost. This is why.
How the S&P 500 Can Give Bitcoin A boost
For nearly 100 years, the S&P 500 has been the most popular stock market index, tracking the performance of the 500 largest US companies. This is the benchmark used to compare the performance of individual stocks.
Since the beginning of the pandemic Bitcoin and the S&P 500 were highly correlated, but that correlation has since disappeared. BTC has become more closely related to gold.
However, a major breakout in the S&P 500 may be on the horizon, which has the potential to give the cryptocurrency market an additional boost. And that’s a big one.
Extreme bearish sentiment in financials would indicate that the stock market is on the cusp of a crash and the worst bear market since 1929. But a higher breakout from an important trend line could trigger a surprising contrarian move to the upside.
The S&P 500 could be breakout out of a year-long pattern | SPX on TradingView.com
Risk Appetite Can Return With Trend Line Breakout
A breakout in the S&P 500 has nothing to do with Bitcoin itself, and any boost will be more because of the message it sends. It can convincingly end bear markets and cause sudden changes in trends.
The data selection is given some of the most significant bearish positions in history, creating an environment ripe for a short squeeze for the record books.
A reversal in the stock market is also a reversal signal for risk assets in general, so Bitcoin and other cryptocurrencies can indirectly benefit from a clear breakout in the S&P 500.
The S&P 500 rose 1% on the day, trading at approximately 4050. Holding above the trend line drawn above is important to continue the rise for the stock market. A move higher would also produce a golden cross in the S&P 500.
BTC is still a ways away from a golden cross | CME-BTC! on TradingView.com
Gold Cross On The Stock Market And Crypto On The Horizon
Bitcoin is at $23,000, but it is still far from the same golden cross. The 50-day and 200-day moving averages have started to roll up, which could be an early indication of an upcoming cross.
A golden cross is executed when the short-term moving average crosses the long-term moving average, and generates a buy signal on the asset. A death cross is an opposite sell signal, which occurs when the short-term moving average crosses the long-term moving average.
Although BTCUSD has yet to cross the daily deadline, several altcoins such as Litecoin, Polygon, Fetch.AI, and others have.
Elsewhere in finance, gold and silver have crossed gold, while the DXY Dollar Currency Index experienced a death cross at the start of 2023.