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Bitcoin as a leading indicator of the stock market

Bitcoin leading indicator for stock markets

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Can we use the price of Bitcoin as a leading indicator for the price of the indices. Watching the charts of the two instruments, we see that this dependence has been fulfilled three times. After the first decline in the Bitcoin price, followed a fall in the stock markets, after which the rebound of the crypto hit again before the SPX reversal. A little later, this dependence was retained at the double top and subsequent decline.

This dependence may have been caused by the serious interest in crypto hedging, a trend that has been popularized in the last year since the boom in the digital currency market.

Currently, we see a correction and a rising impulse in the indexes (SPX on the chart), but considering that Bitcoin made a new bottom whether this should signal a likely new downturn in the stock market. We remain cautious in front of the US stock market opening for possible new short positions in the indices. The current correction gives a better price for adding to short positions or starting new ones.


 Trader Nikolay Georgiev

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