The U.S. stock market and the cryptocurrency market have both rocketed higher in tandem today, with the Dow Jones posting one of its largest single day gains ever while Bitcoin has been able to climb over 6%.
All of the notable rallies seen in the stock market over the past few weeks have been followed by significant downside, however, making it increasingly unclear as to whether or not this momentum will be sustained in the days and weeks ahead.
If the equities market sees further downside as the week drags on, it could create a tailwind that also causes Bitcoin to see a similar decline.
Dow Jones Posts Massive 12% Climb as Bitcoin Pushes Against Key Resistance
The Dow Jones was able to post a significant 11.4% climb today that marked one of the largest single day rallies that it has ever seen, leading it back above 20,000 points following a recent decline to lows within the 18,000 region.
Although this may be significant, it is important to keep in mind that it has posted multiple similar bounces throughout the course of its recent downtrend, with each one being closely followed by significant selloffs.
Bitcoin has been able to rally in tandem today, with the benchmark cryptocurrency climbing as high as $6,800 before facing some resistance.
So far, this resistance has not been enough to catalyze a selloff, and it is a strong possibility that investors and traders alike are awaiting the futures market to open for insight into where equities are heading tomorrow.
Because BTC and other digital assets have been closely tracking the traditional markets, it is probable that tomorrow’s trading session will have some heavy influence over Bitcoin.
What Was Behind Today’s Rally, and Will it Last?
Alex Krüger, a well-respected economist, explained in a recent tweet that he doesn’t necessarily believe that equities have bottomed, noting that today’s rally has come about as a result of the upcoming US stimulus package, President Trump’s optimism that the Coronavirus’ rapid spread will soon slow, and that there may be portfolio re-balancing inflows in the near-term.
“Have stocks bottomed? Maybe. I lean towards no. In the short-term stocks are trading the upcoming US stimulus package, Trump’s optimism, and there are talks of large portfolio re-balancing inflows in the days to come,” he explained.
Have stocks bottomed? Maybe. I lean towards no. In the short-term stocks are trading the upcoming US stimulus package, Trump's optimism, and there are talks of large portfolio re-balancing inflows in the days to come.
— Alex Krüger (@krugermacro) March 24, 2020
If these factors aren’t enough to extend the market’s massive rebound today, Bitcoin could continue struggling to surmount the resistance in the upper-$6,000 region, subsequently leading the entire market lower.
Featured image from Shutterstock.